Assessee relieved of service tax for 1 Jan-15 June 2005; s.66A effective only from 18 April 2006

HC held that the Tribunal erred in concluding liability for service tax for period 1.1.2005-15.6.2005. Relying on a Division Bench decision of the Bombay HC, the court found revenue could collect tax only after valid statutory authority existed, which arose on insertion of s.66A with effect from 18.4.2006; the assessee had begun paying from 15.6.2005. The Department's challenge to that Bombay HC view was noted, but the HC agreed and allowed the appeal, relieving the assessee of liability for the earlier period.

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The High Court of Delhi, consisting of Hon'ble Mr. Justice Vikramajit Sen and Hon'ble Mr. Justice Rajiv Shakdher, recently heard an appeal against a judgment passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in 2008. The appellant, a recipient of architectural services from a non-resident, was called upon to pay service tax under the Service Tax Rules. The CESTAT concluded that the appellant was liable to pay service tax only from 1.1.2005 onwards, based on a notification issued under the Finance Act, 1994. The appellant contested this decision, citing a judgment from the Bombay High Court, and questioned the CESTAT's ruling for the period 1.1.2005 to 15.6.2005. The court agreed with the appellant, referencing the Bombay High Court's judgment, and ruled in the appellant's favor, setting aside the CESTAT's judgment. The appeal was allowed with no costs awarded.

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