TMI Blog2008 (8) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... to as M/s Callison), who do not have any office or business establishment in India and whether the Appellants, as recipient of a taxable service from an offshore service provider are liable, in term of Rule 2 (1) (d) (iv) of the Serviced Tax Rules, 1994, to pay service tax amounting to Rs. 1,83,10,592/- on an amount of Rs. 22,61,54,796/- paid by them to M/s Callison. The Commissioner by the impugned order has - (a) confirmed the Service tax demand of Rs. 1,83,10,592/- under Section 73 (1) of the Finance Act, 1994, by invoking extended period of limitation, along with interest at the applicable rate on this amount as per the provisions of Section 75, (b) imposed penalty of Rs. 1,000/- under Section 77 of the Act and penalty of Rs. 100/- per day under Section 76 of the Act for failure to pay the service tax till the payment of the entire amount of tax and (c) penalty of Rs. 1,83,10,592/- on the Appellant under Section 78 of the Act. 2. Heard both the sides. 2.1 Shri J.K. Mittal, Advocate, the learned counsel on behalf of the Appellants, made the following submissions :- (1) M/s Callison, not being registered as an Architect in the register of Architects maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reign service provider, it is KSEB who was to discharge service tax liability on behalf of the foreign service provider. In the present, there is no such agreement between the Appellants and M/s Callison. Therefore, the above-mentioned Kerala High Court's judgment is not applicable to this case. (5) The show cause notice for allegedly non-paid service tax during period from 1/8/02 to 16/6/05 was issued on 27/1/07 by invoking extended limitation period under Section 73 (1). There is no suppression or intention to evade the tax in this case. Moreover during the period of dispute, on account of conflicting judgments on the issue of liability of service recipient in case of import of service, to pay the service tax, the Appellants were under bona fide belief that they were not liable to pay the tax. Moreover Hon'ble Supreme Court in case of Continental Foundation Jt. Venture vs. CCE, Chandigarh, reported in 2007 (216) E.L.T. 177 has held that mere omission to give correct information is not suppression of facts unless it was deliberate with intention to evade the payment of tax and that when due to certain reasons, there is doubt about liability to pay the duty, extended period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t's Act, 1972 [20 of 1972] and also includes any commercial concern engaged in any manner, whether directly or indirectly in rendering the services in the field of architecture." 3.2.1 The taxable service in relation to architect has been defined under Section 65 (105) (p) as any service provided to a client, by an architect in his professional capacity, in any manner. 3.3 From the above definition of architect, it will be seen that there are two parts of definition. The first part covers any person whose name is entered in the register of architects maintained under Section 23 of the Architect's Act, 1972 and the second part i.e. the inclusive part, covers any commercial concern engaged in any manner, whether directly or indirectly in rendering the service in the field of architecture. While there is requirement of registration in the register of architects maintained under Section 23 of the Architect's Act, 1972 for individual persons covered by the first part of the definition, there is no such registration requirement for the second part of the definition, which covers the commercial concern engaged in any manner, whether directly or indirectly in rendering the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax. A question arises as to who will pay service tax in such cases. Prior to 16/8/02, second proviso to Rule 6 (1) of the Service Tax Rules provided that in case of a person who is non-resident or is from outside India, not having any office in India and is liable to pay service tax on taxable services provided in India, the service tax thereon shall be paid by such person himself or on his behalf by any other person authorized by him, who shall submit to the Commissioner of Central Excise, in whose jurisdiction the taxable services have been rendered, a return containing prescribed details. The very existence of proviso to Rule 6 (2) of Service Tax Rules, 1994 indicates that even prior to 18/04/06, the date on which Section 66A was introduced, import of taxable service by a mode, where foreigner/non-resident service provider not having any office in India provided some taxable service from India to a person in India, was taxable under Section 66 read with Section 65 (105) of the Finance Act and during period prior to 16/8/02, in such cases either the foreign/non-resident service provider could pay the service tax himself or he could authorize some other person to pay the ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Larger Bench of the Tribunal vide judgment dated 27/6/08 reported in 2008 TIOL 1149 (CESTAT DEL-LB), held that it is only w.e.f. 1/1/05, the date from which the Notification No. 36/04-ST dated 31/12/06 issued under Section 68 (2) of the Act came into force, the recipient of taxable service from service provider who is non-resident or is from outside India not having any office in India, would be liable to pay the service tax. 3.5 It is true that comprehensive provisions for taxing the import of service by all possible modes came w.e.f. 18/4/06 when Section 66A was introduced in the Finance Act, 1994 and simultaneously Taxation of Services (Provided from outside India and Received in India) Rules, 2006 were notified vide Notification 11/2006-ST dated 18/4/06. But as discussed above, so far as the taxable services provided from India by a foreigner or non-resident, not having any officer or business establishment in India to a person in India are concerned, these services were taxable even prior to 18/4/06 under Section 66 read with Section 65 (105) of the Finance Act, 1994 and by virtue of Rule 2 (1) (d) (iv) of the Service Tax Rules, 1994 read with Notification 36/04-ST dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the six monthly period ending on 31/3/05, due in April, 2005, the payments made to M/s Callison, U.S.A. and service tax payable should have been declared but no such information was disclosed. The Department came to know about receipt of taxable services by the Appellants, from M/s Callison, U.S.A. and non-payment of service tax on the same only when inquiry in this regard was initiated in October, 2005. The Appellants, therefore, are guilty of wilful suppressing the relevant information from the Department and therefore longer limitation period of five years under proviso to Section 73 (1) of the Act has been rightly invoked and penalties under Section 76 and 78 of the Act have been rightly imposed. However, the quantum of penalty to be imposed under Section 78 of the Act has to be redetermined in view of reduced tax liability. 6. In view of our above findings, while we hold that the Appellants are liable to pay the service tax on the Architectural consultancy service received by them from M/s Callison, U.S.A. for period from 01/1/05 onwards and that for recovery of non- paid service tax longer limitation period under proviso to Section 73 (1) of the Act has been rightl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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