2008 (2) TMI 36 - HC - Service Tax

Rajasthan High Court rules on tax liability for service recipients pre-2005

The High Court of Rajasthan dismissed the appeal, ruling that the liability for tax payment could not be imposed on the recipient of services before ... Liability to pay service tax - Recipient's liability under notification - Prospective operation of notification - Interpretation of Sections 65, 66, 66A and 68 in relation to notification under Section 68(2)Liability to pay service tax - Recipient's liability under notification - Prospective operation of notification - Whether the liability to pay service tax could be fastened on the recipient of services at the time when the tax was paid, having regard to the Notification issued under Section 68(2). - HELD THAT: - The Court examined Sections 65, 66, 66A and 68 and the Notification issued under Section 68(2) and upheld the finding of the Tribunal. The Tribunal correctly held that, at the time the tax was paid, liability could not be fastened on the recipient because the Notification made recipient-liability operative only prospectively from 1.1.2005. Consequently the contention that the recipient bore liability at the earlier time was rejected and no substantial question of law was shown to arise from that conclusion. [Paras 2]The finding that recipient-liability could not be imposed prior to 1.1.2005 was upheld and no substantial question of law arises; the appeal is dismissed.Final Conclusion: The High Court affirms the Tribunal's conclusion that the Notification under Section 68(2) made recipient-liability effective only from 1.1.2005, and therefore dismisses the appeal summarily for lack of any substantial question of law. The High Court of Rajasthan dismissed the appeal stating that the liability for tax payment could not be imposed on the recipient of services before 1.1.2005 as per Sections 65, 66, 66A, and 68 of the law. No error or substantial question of law was found.