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TMI Blog2009 (9) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... y the recipient of service viz., M/s. Canara Bank in terms of rule 2(1)(d)(iv) of Service Tax Rules, 1994. In view of the above, a show-cause notice dated 18-4-2006, was issued by the Joint Commissioner of Service Tax, Bangalore, demanding Service Tax amounting to Rs. 19,45,658 in addition to proposing imposition of applicable interest and penalty on the appellant. As the appellant opted to be assessed by the Large Taxpayers' Unit, a corrigendum was issued to the abovesaid show cause notice vide letter dated 7-11-2006 making the same answerable to the Joint Commissioner, LTU Bangalore, who on adjudication confirmed the demand, interest and imposed penalties under various sections. 2. Aggrieved by such an order of the Joint Commissioner, LTU, the appellants filed an appeal against the said order to the Learned Commissioner (Appeals). Learned Commissioner (Appeals) after considering the oral/written submissions came to the following conclusion : "10.4 This clause (iv) of rule 2(1)(d) of the Service Tax Rules, 1994 was inserted vide Notification No. 12/2002-ST, dated 1-8-2002 and is effective from 16-8-2002. The amendment made to rule 2(1)(d)(iv) by Notification No. 12/2002, dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en recognized as a law for the payment of service tax by the recipient in case of services provided by a person who is non-resident, not having any office in India. Therefore, the appellant being receiver of the services provided by VISA are liable to pay the service tax as per Service Tax Rules, 1994 with effect from 16-8-2002." 3. Learned Chartered Accountant appearing on behalf of the appellant submits that the issue involved in this case is regarding the service tax liability of the appellant on the services rendered by them. As regards the VISA card it is his submission that the appellant is registered under banking and other financial services. He would draw our attention to the provisions of section 65(2) as it existed before 1-5-2006 and after 1-5-2006 and submit that the appellant's case is covered only under serviceable category as provided by the provisions of section 65(33)(a) inserted by the Finance Act, 2006 with effect from 1-5-2006. He would submit that the legislation had brought in a specific entry "credit card debit card or other payment card service" as a service liable for service tax from 1-5-2006 and hence no tax liability arises prior to 1-5-2006. It is his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is liable to pay service tax with effect from 16-8-2002 consequent to the amendment of rule 2(1)(d)(iv) relying upon the decision of the Tribunal in the case of Bajaj Auto Ltd. v. CCE & C 2005 (179) ELT 481/1 STT 83 (Mum. - CESTAT). It is seen that this view of the learned Commissioner (Appeals) is negatived by the Hon'ble High Court of Mumbai. In the case of Indian National Shipowners Association (supra), Hon'ble High Court was considering the provisions under which the learned Commissioner (Appeals) has upheld the demand as confirmed by the adjudicating authority. The Hon'ble High Court has negatived the submissions made by the UOI i.e., revenue, before the Hon'ble High Court and held that service tax liability on the recipient of the services can be fastened on them only from 18-4-2006 when provisions of section 66A was introduced. We may reproduce the ratio of the Hon'ble High Court. "14. In this petition we are concerned with the provisions of section 65(105), which defines the taxable service. By that provision a service provided to a ship or vessel was defined to be taxable service. 15. The charge of service tax in respect of service rendered to a ship or vessel remains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the period from 16-8-2002. Perusal of the above quoted rule 2(1)(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 Petitioners-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 (sic) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice is received or to be received by a person who has his place of business, fixed establishment, permanent address or, as the case may be, usual place of residence, in India, such service shall be deemed to be taxable service for the purposes of this clause'. By this Explanation services provided by a non-resident outside India to a person residing in India has been declared to be taxable service. Therefore, though the services provided to the members of the petitioners-association outside India becomes taxable service, the charge of the tax continues to be on the provider of service as per the scheme of the Act, and because of the Explanation also the Respondents do not get authority of law to levy a service tax in relation to the services rendered to the vessels and ships of the members of the petitioners-association outside India. 20. It appears that a similar provision in the rules was made applicable by the Government in relation to the Clearing Agents by making customers of the Clearing Agent liable for levy of the service tax. That question has been decided by the Supreme Court by its judgment in the case of Laghu Udyog Bharati (supra) and the Supreme Court has clearly la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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