Recipient liability for imported services requires express charging provision; service tax not leviable before section 66A.

Service tax on imported services could not be fastened on the recipient for the period before section 66A came into force, because recipient liability required an express charging provision and could not rest on Rule 2(1)(d)(iv) alone. The governing principle applied was that a service recipient becomes liable for services received from a non-resident or person outside India only when the statute specifically creates that liability. On that basis, the assessee was not liable for the disputed period prior to 18-04-2006.

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Issues: Whether service tax could be fastened on the recipient of services received from a non-resident or person situated outside India for the period prior to the introduction of section 66A of the Finance Act, 1994.

Analysis: The liability of the recipient of imported services was examined in the light of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 and the later introduction of section 66A. The controlling principle applied was that, for the relevant period, the levy could not be imposed on the service recipient merely because the service provider was outside India. The Court followed the settled view that the recipient's liability arose only after the statutory provision expressly created such liability.

Conclusion: Service tax could not be levied on the assessee as recipient of the services for the disputed period prior to 18-04-2006.

Ratio Decidendi: In the absence of a specific charging provision creating recipient liability, service tax cannot be imposed on the recipient of services received from a non-resident or person outside India merely on the basis of a rule.

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