TMI Blog2007 (12) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent. 2. The question involved in this appeal arises out of a judgment and order dated 25.7.2006 passed by a Division Bench of the High Court of Kerala at Ernakulam whereby the appeal filed by the respondent herein from the judgment and order of the Customs Excise Service Tax Appellate Tribunal, Circuit Bench at Cochin in Final Order No.477 of 2005, Appeal No.ST/36/2004 was allowed. 3. The basic fact of the matter is not in dispute. Appellant herein entered into an agreement with M/s. SNC Lavlin Inc. Montreal, Canada (Foreign company) in relation to various projects for obtaining consultancy services from them. The relevant clauses of the said agreement are as under :- " 16.1 - SNC Lavaline and all its expatriate personnel shall be responsible for timely and prompt filing of all returns, 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 Lavaline 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service. 69. Registration.--(1) Every person liable to pay the service tax under this Chapter or the rules made thereunder shall, within such time and in such manner and in such form as may be prescribed, make an application for registration to the Superintendent of Central Excise. 71. Verification of tax assessed by the assessee, etc.- (1) The Superintendent of Central Excise may, on the basis of information contained in the return filed by the assessee under section 70, verify the correctness of the tax assessed by the assessee on the services provided. (2) The Superintendent of Central Excise may require the assessee to produce any accounts, documents or other evidence as he may deem necessary for such verification as and when required. (3) If on verification under sub-section (2), the Superi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 69 of the Finance Act, 1994 made Service Tax Rules, 1994 for the purpose of assessment and collection of service tax. Service tax was imposed on Consultancy Engineering Services w.e.f. 07.07.1997 by a Notification No.23 of 1997 dated 02.07.1997. Consulting Engineer as defined in Section 65(31) of the Finance Act, 1994 is a professionally qualified or any body corporate or any other firm but that directly or indirectly render any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering. 11. Clause (g) of sub-section 105 of Section 65 of the Finance Act, 1994, as amended, provides for the definition of taxable services rendered by a consulting engineer to mean "any service provided to a client by consulting engineer in relation to advice, consultancy or technical service in any manner to client in one or more disciplines of engineering". 12. Sub-rule (1) of Rule 6 of Service Tax Rules, as applicable at the relevant time, stipulated that in case of a person who was from outside India and did not have any office in India, the service tax due on the service rendered by him should be paid by such person or on his beha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the time stipulated by the statute. The liability to pay tax was not on the foreign company. Only on default on the part of the appellant the interest was leviable. Appellant was clearly liable therefor. In other words, the liability being that of the appellant, it must accept the liability of payment of interest leviable thereupon in terms of statute occasioned by the breach on its part to deposit the amount of tax within the prescribed time. 17. Proviso appended to Rule 6 which has been inserted w.e.f. 28.2.1999 cast a liability upon a person authorized by the foreign company to do it in that behalf. The details were to be furnished by a person who was authorized. Clause (2) of the proviso provides for submission of the demand draft within 30 days from the date of raising the bill. Appellant being the person authorized to make payment of the service tax, Section 75 would come into operation in the event of its failure to do so. 18. We may further notice that it was the appellant who had provided space and accommodation to the personnel of M/s SNC Lavalin in their office premises and borne expenditure related thereto. The service provider did not have any indepen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perators was legislatively competent. Laghu Udyog Bharati did not consider the question of legislative competency. Before we consider the scope of the impugned Act, it is necessary to determine the scope of the two legislative entries namely Entry 97 of List I and Entry 56 of List II. It has been recognised in Godfrey Phillips that there is a complete and careful demarcation of taxes in the Constitution and there is no overlapping as far as the fields of taxation are concerned. This mutual exclusivity which has been reflected in Article 246(1) means that taxing entries must be construed so as to maintain exclusivity. Although generally speaking, a liberal interpretation must be given to taxing entries, this would not bring within its purview a tax on subject-matter which a fair reading of the entry does not cover. If in substance, the statute is not referable to a field given to the State, the court will not by any principle of interpretation allow a statute not covered by it to intrude upon this field. 24. Undisputedly, Chapter V of the Finance Act, 1994 was enacted with reference to the residuary power defined in Entry 97 of List I. But as has been held in International Tourist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 List II to name a few. Theoretically, of course, as we have held in Godfrey Phillips India Ltd. v. State of U.P. ultimately even a tax on goods will be on the taxable event of ownership or possession. We need not go into this question except to emphasise that, broadly speaking the subject-matter of taxation under Entry 56 of List II are goods and passengers. The phrase "carried by roads or natural waterways" carves out the kind of goods or passengers which or who can be subjected to tax under the entry. The ambit and purport of the entry has been dealt with in Rai Ramkrishna v. State of Bihar where it was said in language which we cannot better: (SCR p. 908) "Entry 56 of the Second List refers to taxes on goods and passengers carried by road or on inland waterways. It is clear that the State Legislatures are authorised to levy taxes on goods and passengers by this entry. It is not on all goods and passengers that taxes can be imposed under this entry; it is on goods and passengers carried by road or on inland waterways that taxes can be imposed. The expression 'carried by road or on inland waterways' is an adjectival clause qualifying goods and passengers, that is to say, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncidence of taxation with the machinery provided for the collection thereof." 36. In Rai Ramkrishna the tax under Entry 56 of List II was held to be competently levied on the bus operators or bus owners even though the object of levy was passengers (which they were not) because there was a direct connection between the object of the tax viz. goods and passengers and the owners of the transport carrying the goods or passengers. There is thus nothing inherently illegal or unconstitutional to provide for service tax to be paid by the availer or user. 37. The writ petitioners have relying upon the decision in Dwarka Prasad v. Dwarka Das Saraf contended that the amendment to Section 68 by the introduction of a proviso in 2003, was invalid. It is submitted that as the body of the section did not cover the subject-matter, there was no question of creating an exception in respect thereto by a proviso. According to the writ petitioners, the proviso cannot expand the body by creating a separate charge. It is submitted that by merely amending the definition of the word "assessee" it could not be understood to mean that thereby all customers of the services in question were liable. 38. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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