TMI Blog2010 (11) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... , the show cause notice issued, on the basis of explanation Section 65(105) of the Finance Act, 1994, read with amended Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 are not valid in law and liable to be quashed. - 265, 8653-8654, 9227-9228, 10178-10179, 6323, 6411, 9437, 7068 of 2007 , 2556-2557 of 2008 - - - Dated:- 3-11-2010 - R.S. Ramanathan, J. REPRESENTED BY : S/Shri M. Venkatraman, Sr. Counsel for R. Karthikeyan, for the Petitioner. Shri B. Vijay Karthikeyan, for the Respondent. [Order]. - In all these writ petitions, the petitioners prayed for declaration, declaring that Explanation to Sec. 65(105) of the Finance Act, 1994, read with amended Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, coming into effect f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes of arguments and contended that explanation to Section 65(105) of Finance Act was validly enacted and cannot be declared as ultra vires and also relied upon the judgments referred in the notes of arguments. 6. On the other hand the learned Senior Counsel Mr. Venkatraman appearing for the petitioner argued that having regard to the resent judgment of the Hon ble Supreme Court upholding the judgment of the Bombay High Court rendered in 2009 (13) S.T.R. 235 (Bom.) (Indian National Shipowners Association v. Union of India) the writ petitions are liable to be allowed. Nevertheless, for the purpose of narration the following facts are necessary. The explanation to Section 65(105) of the Finance Act, 1994, was introduced on 16-6-2005 and cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 resident, in a country other then India and b. Received by a person who has his place of business, fixed establishment, permanent address or usual place of residence, in India. Such service shall, for the purposes of this section, be the taxable service, and such taxable service shall be treated as if the recipient had himself provided the service in India, and accordingly all the provisions of this Chapter shall apply : Provided that where, the recipient of the service is an individual and such service received by him is otherwise than for the purpose of use in any business or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Finance Act explanation to Section 65(105) which was in force between 16-6-2005 to 17-4-2006 and Rule 2(1)(d)(iv) of Service Tax Rule 1994, in certain with effect from 16-8-2002. 9. The Bombay High Court after carefully analysing the provisions of the Income Tax and Service tax and after following the judgment of the Hon ble Supreme Court rendered in Laghu Udyog Bharati v. Union of India reported in 2006 (2) S.T.R. 276 = 1999 (112) E.L.T. 356 (S.C.) held as follows : 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 66 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed only after the introduction to Section 66A of the Finance Act. The judgment of the Bombay High Court referred to above was upheld by the Hon ble Supreme Court in SLP Civil No. 1893 of 2009 on 14-12-2009 and the same is reported in 2010 (17) S.T.R. J57. Therefore, having regard to the judgment of the Bombay High Court which was later approved by the Hon ble Supreme Court, the authorities have no power to levy the service tax prior to 17-4-2006 and therefore the impugned show cause notices demanding service tax prior to the period are liable to be quashed. As a matter of fact it has been made clear in the Bombay High Court judgment that only after the introduction of Section 66A the respondent got legal authority to levy service tax on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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