TMI Blog2006 (7) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... eiver has no liability. We find it difficult to accept the said contention. The mere fact that the service provider was provided with an office in the building owned by the service receiver it cannot be treated as an office or registered office of a foreign company. No materials have been produced to show that the service provider has got an independent registered office in India. In any view, going by the agreement entered into between the service provider and service receiver and also the reply made by the Board, it is evident that service tax liability is to be borne by the service receiver and not on the service provider. Thus, we are inclined to allow this appeal and set aside the judgment of the Tribunal. The order of the assessing authority stands restored. Questions raised are answered in favour of the appellant. We are informed that the service receiver has already met the service tax liability, in our view, rightly. Appeal is allowed. - RADHAKRISHNAN K.S. AND RAMKUMAR V. , JJ. The judgment of the court was delivered by K.S. RADHAKRISHNAN J. This appeal is preferred by the Commissioner of Central Excise under section 35G of the Central Excise Act, 1944 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing control within territory of India for legal records? We are satisfied from the pleadings of the parties as well as from the proceedings of the Commissioner that the following substantial questions of law are involved in this case. We formulate the following questions of law as per sub-section (3) of section 35G of the Central Excise Act, 1944. (A) Is not the service receiver liable to pay service tax prior to the amendment of rule 6(1) of the Service Tax Rules as it stood prior to August 16, 2002 and subsequent to the said date in view of clauses 16.1, 16.2, 18.1 and 18.2 of the agreement entered into between the service provider and the service receiver? (B) Is not the service receiver liable to take up the responsibility of meeting the service tax demands from the excise authorities in view of clause 16.2 of the agreement through authorised person within the meaning of the proviso to sub-rule (1) of rule 6 of the Service Tax Rules, 1994? (C) Is not the service provider liable to the penalty, interest or additional liability in case service provider personnel do not comply with the tax requirements? The Kerala State Electricity Board (for short, the KSE Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 to the KSE Board to show cause why service tax of Rs. 1,38,21,517 should not be demanded from them under section 73(1)(a) of the Finance Act, 1994 as amended and interest at the appropriate rate under section 75 and why separate penalty should not be imposed under sections 75A, 76, 77 and 78 for non-registration, non-payment of service tax, non-filing of return and suppression of value of taxable service, respectively. The KSE Board submitted reply to the show cause notice pertaining to the Kuttiadi Extension Scheme as well as to the Pallivasal, Sengulam and Panniyar upgradation projects. Reply refers to the contract entered into between KSE Board and SNC Lavalin, extract of which is produced and marked as annexure A6. Referring to the terms of the contract it was stated in the reply that the service rendered by M/s. SNC Lavalin is taxable. All the same it is stated that at the time of introduction of the Service Tax Rules, 1994 the responsibility for registration, charging, recovery and payment of service tax was on the service provider, that is, SNC Lavalin and that SNC Lavalin was having an office at the project site for Kuttiadi Extension Scheme. It is also stated that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn company. The Tribunal also found that the KSE Board is not an agent nor an authorised person on behalf of the foreign company since the KSE Board does not represent the foreign company in India and that after August 16, 2002 when the rule was amended service tax shall be discharged by the person who received the service from the foreign company which does not have an office in India. After perusing the agreement the Tribunal took the view that the KSE Board is providing various facilities including air-conditioned office to personnel of SNC Lavalin as per the contract and therefore demand should have been made on the SNC Lavalin, the service provider. The Tribunal therefore concluded that prior to August 16, 2002 service tax cannot be demanded from the KSE Board as the Board is not an agent or authorised person of foreign service provider and after August 16, 2002 amendment, the Board is not required to pay the tax as the foreign service provider has its office in India. The order of the Commissioner was therefore set aside. Aggrieved by the order of the Tribunal, the Commissioner of Central Excise has filed the present appeal. Counsel for the appellant Sri S. Krishnamoort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly renders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering. As per clause (g) of sub-section (l05) of section 65 of the Finance Act, 1994 as amended, the taxable service rendered by a consulting engineer has been defined as any service provided to a client by a consulting engineer in relation to advice, consultancy or technical service in any manner to a client in one or more disciplines of engineering. Indisputably SNC Lavalin is a consulting engineer as per the abovementioned provision and service rendered by them to the KSE Board is taxable as per the provisions of the Act. The proviso to sub-rule (1) of rule 6 of the Service Tax Rules, 1994 as it stood prior to August 16, 2002 stipulated that in the case of a person who was a non-resident or 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 behalf by any other person authorised by him who should submit to the Commissioner of Central Excise in whose jurisdiction the taxable services had been rendered, a return containing specific details with necessary enc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is evident from clause 16.1 that service provider and its expatriate personnel shall be responsible for timely and prompt filing of all returns, documents, estimates, accounts, information and details complete and accurate in all respects as may be required under the Rules. In case service provider or any of its expatriate personnel do not comply with the tax requirements, it will result in penalty, interest or additional liability and the same shall be borne by SNC Lavalin and not by the service receiver. Clause 16.2 states that the tax liability will be borne by the service receiver. Service (1)Here italicised. provider shall provide the service receiver the relevant orders, notices of demand, invoices, appellate orders and other relevant information as proof of the actual tax liability. Service receiver on receipt of the proof of actual service tax liability would take appropriate action in meeting the tax liability or contest the appeals against the assessment orders through the service provider. Responsibility is however cast on the service provider to file returns, estimates, accounts, documents, etc. Service provider is also responsible to meet the penalty, interest, addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty, interest or additional liability in case such a demand was made by the authorities and on the failure to file proper returns, documents, estimates, accounts, information, etc. So far as the actual tax liability is concerned, the KSE Board, the service receiver, has taken up the responsibility. Service provider need only submit notice of demand, invoices, etc., as proof of tax liability to the service receiver and the same will be borne by the service receiver. Service provider is also not expected to contest those orders and they need challenge the orders only if so required by the KSE Board that too, the costs and expenses of the said challenge have to be borne by the service receiver. We are therefore of the considered view that as per sub-rule (1) of rule 6 as it stood prior to August 16, 2002 and going by the agreement as well as the reply to the show cause notice it is clear that the service receiver is the authorised person to meet the service tax liability. Even after the amendment of the rule with effect from August 16, 2002 agreement still holds good and the service receiver has taken up the responsibility of meeting the service tax liability. The question as to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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