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TMI Blog2010 (5) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... ant facts that arise for consideration are that on verification of accounts for the financial years 2003-04, 2004-05 and 2005 it has been revealed that the assessee have paid an amount of Rs. 28,72,44,769 to the Foreign companies towards receipts of the services of "Scientific and Technical Consultancy", 'Business Auxiliary Services', "Intellectual Property Services Other Than Copyright", "Test, Inspection, Certification" and "Manpower Recruitment Agency". As per rule 2(1)(d)(iv) of the Service Tax Rules, 1994 with effect from 16-8-2002 "person liable for paying the service tax" means "in relation to any taxable service provided by a person who is a non-resident or is from outside India, does not have any office in India, the person receivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dated 18-4-2008 was issued to the appellant directing them to show cause as to why they being recipient of the services, from a person who is situated abroad, be not liable to pay service tax as per the provisions of rule 2(1)(d) of Service Tax Rules, 1994 as amended with effect from 16-6-2005. The appellants resisted the show-cause notice on various grounds, mainly on the ground that they being the recipient of the services, the service tax liability, if any, on them would be leviable only from 18-4-2006, on which date provisions of section 66A were brought into statute. For this purpose they relied on various decisions. The adjudicating authority after granting an opportunity of personal hearing and considering the submissions made duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucation Cess on the amounts paid to foreign companies towards Intellectual property services received during the period 10-9-2004 to 31-3-2005, being the recipient of service in terms of rule 2(1)(d)(iv) of the Service Tax Rules, 1994, should be paid by them under proviso to sub-section (2) of section 73 of the Finance Act, 1994, read with rule 6 of Service Tax Rules, 1994; (iv) an amount of Rs. 2,09,33,205 (Rupees Two Crores Nine Lakhs Thirty Three Thousand Two Hundred and Five only) being the Service Tax and Education Cess on the amounts paid to foreign companies towards Testing And Analysis and Technical Inspection And Certification Services, received during the period 1-7-2003 to 31-3-2004 @ 8 per cent and 2004-05, being the recipien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 78 of the Finance Act, 1994 for having suppressed the facts. The penalty is liable to be reduced to 25 per cent (i.e. Rs. 75,00,000) in case ServiceTax as determined in (i), (ii), (iii), (iv) and (v) above is paid along with interest and penalties within 30 days from the communication of this order in terms of proviso to section 78 of the Finance Act, 1994. 4. Ld. Counsel appearing on behalf of the appellant submits that the entire issue is regarding the service tax liability of the appellant as a recipient of the services. It is her submission that the judgment of the Hon'ble High Court of Bombay in the case of Indian National Shipowners Association v. Union of India [2009] 18 STT 212 (Bom.) clearly settles the law in the favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justifying the levy of service tax for the period from 16-8-2002. Perusal of the above quoted rule 2(d)(iv) shows that by that provision a person liable for paying the service tax was defined to mean in relation to any taxable service provided by a person who is non-resident or is from outside India to a person receiving taxable service in India. Apart from the fact that this rule is contrary to the provisions of section 68 and other provisions of the Act, under this provision the recipient of the service became liable for paying the service tax provided the service was received in India. The entire case of the Petitioners is in relation to the service received by the vessels and ships owned by the members of the Petitioner-association outs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 with effect from 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 apparen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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