2009 (5) TMI 56 - HC - Service Tax

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 ... Liability to pay service tax - recipient of taxable services of the nature of architectural services from a non-resident - Import of Service - Rule 2(1)(d)(iv) - Whether the Tribunal misdirected itself in law in coming to the conclusion that the assessee will be liable to pay service tax for the period 1.1.2005 to 15.6.2005? - HELD THAT:- The learned counsel for the assessee submits that service tax is being paid by the assessee w.e.f. 15.6.2005. It is, however, the contention of the assessee that in view of the judgment of the Division Bench of Bombay High Court in Indian National Shipowners Association Vs. Union of India [2008 (12) TMI 41 - BOMBAY HIGH COURT], it stands declared that the Revenue can collect tax only upon being invested with due legal authority; an event which occurred on the insertion of Section 66A in the Finance Act, 1994, w.e.f. 18.4.2006 by virtue of the Finance Act, 2006. Apropos we have been informed that the Department is in the process of filing an appeal against the said judgment of Bombay High Court. The answer to the question is squarely covered by the judgment of the Bombay High Court in the case of Indian National Shipowners Association (supra) with which were in respectful agreement. Appeal is allowed. 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.