TaxTMI 
TaxTMI 
TaxTMI 
2010 (2) TMI 454
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....05 to their group of companies situated abroad. The lower authorities have come to a conclusion that the service tax liability on the Technical know-how fees and Royalty charges paid by the appellant during the relevant period is liable to service tax liability, on the point of reverse charge mechanism, as the appellant being recipient of the services, is liable to discharge the service tax liability. Show-cause notices were issued to the appellant demanding the service tax. The Adjudicating Authority after considering the representation made before him and also considering the various case-laws as produced by the appellant before him, held that the appellant is liable to pay the service tax on the amounts which were paid by them as royalty....
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....ifically on rule 2(1)(d)(iv) of Service Tax Rules, 1994 as amended. We may reproduce the said findings : "With regard to the liability to pay service tax, it has to be noted that the receiver of service is liable to pay service tax as per the Service Tax (Amendment) Rules, 2002, with effect from 16-8-2002, under rule 2(1)(d)(iv) of the Service Tax Rules, 1994 as further amended by Service Tax (Fifth Amendment) Rules, 2005 and further by Service Tax (Second Amendment) Rules, 2006. As per these amendments, the receiver of services is liable to pay service tax on the services received by them. Service tax is liable to be paid by the service receiver on the services received from the non-residents who does not have office in India. This view h....
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....trary to the provisions of section 68 and other provisions of the Act, under this provision the recipient of the service became liable for paying the service tax provided the service was received in India. The entire case of the petitioners is in relation to the service received by the vessels and ships owned by the members of the petitioner-association outside India. Therefore, it cannot be said that on the basis of rule 2(1)(d)(iv), service tax can be levied on the members of the petitioners-association. It is further to be seen here that section 64 gives powers to the Central Government to make rules for carrying out the provisions of the Chapter. The Chapter relates to taxing the services which are provided, the taxing on the value of t....
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....esident or is from outside India is notified. If rule 2(d)(iv) is taken to be rule framed pursuant to this provision, then a person who receives taxable service in India from a person who is non-resident or is from outside India becomes taxable and not service rendered outside India by a person who is nonresident or is from outside India. Therefore, levy of service tax from the members of the petitioners-association from 1-2-2005 (sic) 1-1-2005 cannot be justified. Then reliance is placed on Explanation which is added below section 65(105). That Explanation was added by the Finance Act, 2005 with effect from 16-6-2005. That Explanation reads as under:— 'Explanation - For the removal of doubts, it is hereby declared that where any....
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....e tax is on the persons rendering the services and by making a provision in the Rules, levy of tax cannot be shifted to the recipients of the services and the Rule framed which brought about this situation has been declared by the Supreme Court to be invalid. The law laid down by the Supreme Court in its judgment in Laghu Udyog Bharati (supra) is squarely applicable to rule 2(1)(d)(iv), which is relied on in this case. It appears that it is first time when the Act was amended and section 66A was inserted by the Finance Act, 2006 with effect from 18-4-2006, the respondents got legal authority to levy service tax on the recipients of the taxable service. Now, because of the enactment of section 66A, a person who is resident in India or busine....