TaxTMI 
TaxTMI 
2012 (8) TMI 881
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....the Companies Act, 1956 and petitioner No. 2 is its office bearer. The petitioners are engaged in the business of manufacture of various industrial products. For the purpose of manufacturing activity and for utilising advance technology to improve the quality of goods, petitioner No. 1-company avails of technical know-how provided by a U.S. based company. For such service, the petitioners paid royalty of Rs. 2,52,60,537 to such service provider. The respondent-authorities holding a belief that on such payments, the petitioners were liable to pay service tax in terms of rule 2(1)(d)(iv) of the Service Tax Rules, 1994 (hereinafter to be referred to as "the Rules"), issued a show-cause notice dated October 15, 2004 calling upon the petitioners....
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....15 (Guj), wherein relying on the decision of the apex court in the case of Laghu Udyog Bharti v. Union of India [1999] 115 STC 616 (SC); [2005] 1 VST 24 (SC) and other decisions of the Bombay and Delhi High Courts, this High Court took a view that in the absence of any charging section in the parent Act, on the basis of rule 2(1)(d)(iv), service tax cannot be collected from the service recipient. 5. Ms. Sejal K. Mandavia, learned counsel for the Department submitted that since issuance of the show-cause notices, the Legislature has amended the Act and introduced section 66A, which provides for collection of service tax from the service recipient in cases where the service provider is a nonresident. 6. Before dealing with the rival content....
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.... (b) received by a person (hereinafter referred to as the recipient) 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 recipients 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 commerce, the provisions of this sub-section shall not apply: Provi....
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....; "This rule for the period prior to April 18, 2006 and; in particular in the absence of section 66A of the Finance Act, 1994 came up for consideration before the Bombay High Court in the case of Indian National Shipowners Association [2009] 21 VST 60 (Bom). Relying on the decision of the apex court in the case of Laghu Udyog Bharti [1999] 115 STC 616 (SC); [2005] 1 VST 24 (SC), the Bombay High Court was of the opinion that before enactment of section 66A of the Finance Act, 1994 there was no authority vested by law in the respondent to levy service tax on a person who is resident in India but who receives services outside India. It was observed that the law laid down by the apex court in the case of Laghu Udyog Bharti [19....
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....ghu Udyog Bharti [1999] 115 STC 616 (SC); [2005] 1 VST 24 (SC). The Bombay High Court's observations relevant for our purpose may be noted thus (page 73 of 21 VST): "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 service tax. That question has been decided by the Supreme Court by its judgment in the case of Laghu Udyog Bharti [1999] 115 STC 616 (SC); [2005] 1 VST 24 (SC) and the Supreme Court has clearly laid down that the imposition of the service tax is on the persons rendering the services and by making a provision in the Rules, levy of tax cannot be ....