2009 (4) TMI 109

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....se, the service provider rendered the services in Atlanta, USA) is liable to pay service tax. According to the Revenue, the appellants are liable to pay service tax with effect from 01.01.2005, while according to the assessees, the date from which they would be required to discharge service tax liability is 18.04.2006 which is the date on which Section 66A of Chapter V of the Finance Act, 1994 was enacted. 2. We have heard both sides. We find that in a recent decision, the Hon'ble Bombay High Court has held in Indian National Shipowners Association Vs. Union of India & Ors. 2009 (90) RLT 739 (Bom.) = 2008-TIOL-633-HC-MUM-ST, that prior to the enactment of Section 66A, there was no authority vested by law on the respondents to levy service ....

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....n 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 the service and it is only the person who is providing the service can be regarded as an assessee. The rules therefore, cannot be so framed as not to carry the purpose of the Chapter and cannot be conflicted with the provisions in Chapter V of....

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....d not service rendered outside India by a person who is non-resident or is from outside India. Therefore, levy of service tax from the members of the Petitioners-association from 1.2.2005 cannot be justified. 19. Then reliance is placed on explanation which is added below Section 65 (105). That explanation was added by 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 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 r....

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....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 per....