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Issues involved: Challenge to vires of Section 66A of the Finance Act, 1994 and show-cause notice issued pursuant to the provision.
Summary: The High Court of Madras heard two Writ Petitions challenging the validity of Section 66A of the Finance Act, 1994 and the related show-cause notice. The Court did not grant a Stay during the pendency of the writ petition. A counter affidavit was filed justifying the show-cause notice and the provision in question. The issue raised in the writ petition had already been addressed by the Division Bench of the Bombay High Court in a previous case. The Supreme Court had also dismissed a Leave Appeal related to the matter. Subsequently, the Government of India issued a Circular directing authorities on the assessment of service tax liabilities. The Circular clarified the tax liabilities in cases of taxable services provided by non-residents and received in India. It also highlighted the application of service tax in cases of services received outside India by residents or businesses in India. The Circular addressed discrepancies in the application of service tax in certain cases and directed field formations to follow specific guidelines. The Court, considering the judgments and Circular, held that the petitioners' liability should be calculated from a specific date. Ultimately, both writ petitions were dismissed without costs. In conclusion, the Court rejected the Writ Petitions based on the previous judgment of the Bombay High Court and directed the authorities to determine the petitioners' liability from a specified date based on the Circular issued by the Government of India.
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