Recipient liability for service tax on foreign architectural services arose only after Section 66A came into force.

Recipient liability to pay service tax on architectural services received from a non-resident service provider for 1.1.2005 to 15.6.2005 depended on the legal authority then available under the Service Tax Rules, 1994 and the Finance Act, 1994. The HC held that tax could be collected only when backed by due authority of law, and that such authority arose only with the insertion of Section 66A with effect from 18.4.2006. Service tax was therefore not recoverable from the assessee for the disputed period, and the question of law was answered in the assessee's favour.

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Issues: Whether the assessee was liable to pay service tax for the period from 1.1.2005 to 15.6.2005 in respect of architectural services received from a non-resident service provider.

Analysis: The liability of the recipient to discharge service tax was examined in the light of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, Section 68(2) of the Finance Act, 1994 and the later insertion of Section 66A of the Finance Act, 1994. The Court accepted the legal position that tax could be collected only upon due authority of law and followed the view that such authority arose only with the insertion of Section 66A with effect from 18.4.2006.

Conclusion: The assessee was not liable to pay service tax for the period 1.1.2005 to 15.6.2005; the question of law was answered in favour of the assessee and the appeal was allowed.

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