TaxTMI 
TaxTMI 
2017 (9) TMI 161
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.... a refund claim of Rs. 64,38,636/- on 25/09/2008 on account of erroneous payment of service tax on technical inspection and certification services. A show-cause notice bearing NO.ST/Div.V/Refund/ONGC/Gr.III/2008-09 dated 17/02/2009 was issued to the appellant on the ground that services rendered by the contractor under the provisions of contract was within the purview of Consulting Engineers Service as defined under Section 65 (31) of the Finance Act, 1994 and the service tax having been paid correctly, the refund claim was proposed to be rejected. The adjudicating authority vide order-in-original dated 22/03/2010 rejected the refund claim by classifying the contractors service under the category of 'Management Consultancy Services'. Accordingly, held that the appellants were liable to pay service tax under the reverse charge mechanism in terms of Section 66A of the Finance Act, 1994 and Taxation of Services (Provided from Outside India and received in India) Rules, 2006. Aggrieved by the said order-in-original, the appellant filed an appeal before the Commissioner (Appeals). The Revenue also filed an appeal before the Commissioner (Appeals), on the ground that the refund c....
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....ment that the contract is for engagement of a contractor for plan approval and supervision/monitoring during construction of new seismic survey vessel and the scope of work is mainly plan approval and supervision/monitoring during construction of the seismic survey vessel. It is significant to note that the services of inspection/monitoring done by the contractor was to ensure that the construction of the vessel by Amur Shipbuilding Plant at Russia met the standards of the classification of society i.e. GL. I am therefore, of the view that the services would correctly fall within the ambit of Technical Inspection and Certification Services and neither under Consultant Engineers as alleged in the SCN nor under Management Consultants Service as held in the impugned order. 16. It is also important to first determine whether the services of the Contractor rendered in Russia, which was beyond the territorial waters of India, would be subject to levy of service tax in terms of Section 66A of the Finance Act, 1994. 17. Section 66A of the Finance Act, 1994 was inserted by Section 68 of the Finance Act, 2006 w.e.f 18/04/2006, which interalia, provides as under: Section 66A Charge of ....
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.... be such services as are received by a recipient located in India for use in relation to business or commerce. 19. I find that Hon'ble Tribunal in the case of Stone & Webster International I(nc 2011 (22) STR 467 (Tri-Ahmd) has observed that: "9. We find that it is the case where designs, technical know-how etc. which were admittedly prepared by the appellant in Boston, stand transferred by them to IOCL. It is basically a transfer of technical know-how/design, which is nothing but the goods to the appellant. The Commissioner, in Para 23.2 of his order, has specifically observed that the services rendered by the appellant have been consumed in India. If that be so, it can be safely concluded that the services were not rendered in India. The consumption of service in India is not taxable event. Situs of the tax would be where the taxable event occurs and not where the effect or the consequence thereof is felt. The taxable event has not occurred in India, inasmuch as the activity of development of technology, technical information & know-how, transfer of design, drawing etc. has taken place in USA. The consumption of such services in India, when admittedly no such service stands pro....
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.... 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 (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 Finance Act, 2006 w.e.f. 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 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....