TaxTMI 
TaxTMI 
2006 (7) TMI 619
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.... entered into between a foreign service provider and an Indian service receiver within the meaning of rule 6(1) of the Service Tax Rules, 1994? (iii) After the amendment of rule 6 of the Service Tax Rules, 1994 with effect from August 16, 2002, merely because an office of the service provider with the employees and staff of the service receiver had been opened in the service receivers premises, does it take away the liability of the service receiver's to pay service tax? (iv) Is it not the amendment to rule 6 of the Service Tax Rules, 1994 introduced with effect from August 16, 2002 which enables the rendering of service from a foreign country and when the service is rendered physically in India, is it not the liability of service tax shouldering upon the person who receives service and acting as an agent/ authorised person? (v) Under the law of the land whether a contractual agreement takes away the liability to pay service tax? (vi) When the contract entered into between the service receiver and service provider stipulates that all tax liability and other expenditure will be borne by the service receiver and such relevant materials has to be given to the service receiver ....
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.... that the KSE Board has paid an amount of 31,16,061.86 Canadian dollars between February 1998 and May 2001 against the invoices issued by the consulting firm SNC Lavalin during the period from September 1997 to December 2000 as consultancy service charges for the services rendered for the above project. The KSE Board has also awarded the modernisation of PallivasalSengulam-Panniyar upgradation project to SNC Lavalin at a project cost of 5,27,58,740 Canadian dollars for the cost of materials supplied by the firm and at 71,90,000 Canadian dollars for consultancy services provided by them. Scrutiny of annual accounts and other documents maintained by the KSE Board revealed that the assessee has paid an amount of 60,98,282.83 Canadian dollars between July 1998 and December 2002 against invoices issued by the consulting firm during the period from July 1998 to December 2002 as consultancy service charges to the KSE Board for the services rendered for the project. Above facts would show that a total amount of consultancy charges received by SNC Lavalin for the above works would come to 92,14,344.69 Canadian dollars. The Government of India have introduced service tax on "Consultancy En....
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....levant orders, notices of demand, invoices, appellate orders and other relevant information as the proof of the actual tax liability to be borne by the KSE Board sufficiently in advance to enable the Board to take appropriate action in this connection. Further it is also pointed out that the KSE Board may request for exemption and if exemption is not granted the KSE Board shall pay service tax due. The Deputy Commissioner of Central Excise considered the reply submitted by the KSE Board; perused the documents and heard the representative of the KSE Board. Considering all the aspects of the matter, the Deputy Commissioner came to the conclusion that the KSE Board has failed to perform the statutory obligation under sections 68, 69 and 70 of Chapters V and VA of the Finance Act, 1994. The Deputy Commissioner found that the KSE Board is liable to pay service tax amounting to Rs. 1,37,43,435 under section 73(1)(a) of Chapters V and VA of the Finance Act, 1994 and also imposed penalty of Rs. 500 and Rs. 1000 under sections 75A and 77 of Chapters V and VA of the Finance Act, 1994 as amended for non-registration and for not filing ST-3 returns as prescribed. The KSE Board took up the m....
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....the reply submitted by the KSE Board to the show cause notice wherein the KSE Board has clearly admitted that the actual service tax is to be borne by the KSE Board, the service receiver. Counsel appearing for the KSE Board Sri S. Raghu supported the findings of the Tribunal and contended that the KSE Board cannot be considered as an agent of SNC Lavalin; nor an authorised person and that they do not represent SNC Lavalin in India. Resultantly liability on the service receiver is neither as an agent nor as an authorised person of the service provider. Even if the rule was amended on August 16, 2002 the Board cannot be treated as an agent or authorised person. Service provider has maintained an office in India and even prior to August 16, 2002 and thereafter and hence service receiver cannot be held liable for payment of service tax. Counsel however submitted that in any view of the matter no substantial questions of law arise for consideration within the meaning of section 35G in this case and therefore prayed for dismissal of the appeal. The Central Government in exercise of the powers conferred by subsection (1) read with sub-section (2) of section 94 of the Finance Act....
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....e Commissioner of Central Excise in whose jurisdiction the taxable services had been rendered, a return containing specific details with necessary enclosures. Going by the agreement executed between the service provider and the receiver it is clear that the responsibility of paying service tax is on the service receiver. Annexure A6 is the agreement executed between them. Clause 16 of the agreement deals with SNC Lavalin's obligations for tax procedural requirements. Similar is the clause in the other agreement also. We may extract clauses 16.1, 16.2 and 16.3 for easy reference: "16.1 SNC Lavalin and all its expatriate personnel shall be responsible for timely and prompt filing of all returns, documents, estimates, accounts, information and details complete and accurate in all respects as may be required under the applicable laws/regulations in India before the appropriate authorities in India. In case SNC Lavalin or any of its expatriate personnel do not comply with the above tax requirements, which results in any penalty, interest or additional liability, the same shall be borne by SNC Lavalin. 16.2 SNC Lavalin shall provide KSEB the relevant orders, notices of demand, invo....
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....y, interest or additional liability, the same shall be borne by SNC Lavalin. According to clause 16.2, SNC Lavalin shall provide, KSE Board the relevant orders, notices of demand, invoices, appellate orders and other relevant information as the proof of the actual tax liability to be borne by KSEB, sufficiently in advance to enable KSEB to take appropriate action in this connection. The obligation of KSEB is to pay the taxes only as per information/certificate furnished by their tax consultants. In the light of the above position it is submitted that KSE Board is not duty-bound to register as a service tax payer or bound to file returns as required under the relevant provisions of the Act." It is also stated in the reply as follows: "Since the works were done for public interest, it is requested that Board may be exempted from payment of service tax and favourable decision may be passed on to KSE Board, if not exempted, KSE Board shall pay the service tax due. As per clause 16.1 of the agreement M/s. SNC Lavalin is responsible for payment of any penalty, interest or additional liability, if they do not comply with the tax requirement. Hence, it is requested that the inter....