TaxTMI 
TaxTMI 
2010 (11) TMI 187
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....1994, coming into effect from 16-6-2005 is ultra vires Sections 64, 65, 66, 67 and 68 of the Finance Act, 1994 and as a result Service Tax cannot be extended to such services rendered by service providers from and outside India even though the service recipients are located in India. 2. In some of the writ petitions the petitioners also challenged the show cause notice issued under explanation to Section 65(105) of the Finance Act, 1994, read with amended Rule 2(1)(d)(iv) of the Service Tax Rules, 1994. 3. As the issue is relating to the vires of the explanation to Section 65(105) of the Finance Act, 1994, read with amended Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, there is no need to go into the facts of the case. ....
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....e Finance Act, 1994, was introduced on 16-6-2005 and corresponding amendment was also made. The explanation to Section 65(105) of the Finance Act 1994 is as follows : "where any service provided or to be provided by a person, who has established a business or has a fixed establishment from which the service is provided or to be provided, or has his permanent address or usual place of residence, in a country other than India and such service is received or to be received by a person who has his place of business, fixed establishment, permanent address or, as the case may be, usual place of residence, in India, such service shall be deemed to be taxable service for the purposes of this clause". 7. A Corresponding amendment was made to R....
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....ceived by him is otherwise than for the purpose of use in any business or commerce, the provisions of this sub-section shall not apply; Provided further that where the provider of the service has his business establishment both in that country and elsewhere, the country, where the establishment of the provider of service directly concerned with the provisions of service is located, shall be treated as the country from which the service is provided or to be provided. Where a person is carrying on a business through a permanent establishment in India and through another permanent establishment in a country other than India, such permanent establishments shall be treated as separate persons for the purposes of this section. Explanatio....
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....vice tax on the recipients of the taxable service. Now, because of the enactment of Section 66A, a person who is resident in India or business in India becomes liable to be levied service tax when he receives service outside India from a person who is non-resident or is from, outside India. Before enactment of Section 66A it is apparent that there was no authority vested by law in the Respondents to levy service tax on a person who is resident in India, but who receives services outside India. In that case till Section 66A was enacted a person liable was the one who rendered the services. In other words, it is only after enactment of Section 66A that taxable services received from abroad by a person belonging to India are taxed in the hands....