Rule 2(1)(d)(iv) cannot create tax liability without statutory authorization; service tax on import before 18-4-2006 unsustainable under s65(105) Explanation

SC dismissed the appeal, upholding the HC's finding that Rule 2(1)(d)(iv) cannot create a tax liability absent statutory authorization. The Court held that prior to insertion of section 66A (effective 18-4-2006) there was no legal authority to levy service tax on import of services, and the Explanation to section 65(105) did not confer such taxing power. The tax demand was therefore unsustainable.

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The Supreme Court of India dismissed the special leave petition in the case. Justices S.H. Kapadia and Aftab Alam were presiding. Counsels included Mr. Mohan Parasaran, Mr. Harish N. Salve, and others.

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