Page 77 - GSTL_16th July 2020_Vol. 38_Part 3

2020 ] ENMAS ANDRITZ PVT. LTD. v. ASSTT. COMMISSIONER OF S.T., CHENNAI 315
ness activities, it received certain services in the realm of testing, valuation and
consulting engineering from abroad, stretching between the period 1-4-2005 to
17-4-2005. Tax of a sum of Rs. 22,79,812/- was remitted by the petitioner in the
light of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, extracted below :
‘in relation to any taxable service provided by a person who is a non-
resident or is from outside India, does not have any office in India, the per-
son receiving taxable service in India’.
2. The virus of the aforesaid Rule was challenged by the Indian National
Ship Owners Association, before the Bombay High Court. The main contention
raised by the petitioner therein was two fold (i) that the imposition of Service Tax
by way of a Rule without there being a corresponding statutory provision back-
ing the same is impermissible and without the authority of law and (ii) the charg-
ing provision, Sections 65(105) and 66 of Finance Act, 1994 authorized the levy of
service tax only upon the service provider and not upon the service recipient as
was sought to be done by Rule 2(1)(d)(iv). The challenge before the Court was set
out in paragraph-1 of the decision of the Division Bench in Indian National Ship
Owners Association v. Union of India [2009 (13) S.T.R. 235 (Bom.)], as follows :
‘By this Petition the Petitioners challenge the constitutional validity of the
following :-
(i) Section 66A of the Finance Act, 1994; (hereinafter referred to as
the Act for the sake of brevity), which has been introduced
with effect from 18th April, 2006;
(ii) An explanation to Section 65(105) of the Act, which was in
force between 16th June, 2005 and 17th April, 2006; and
(iii) Rule 2(i)(d)(iv) of the Service Tax Rules, 1994 inserted with ef-
fect from 16th August, 2002;’
3. In conclusion, the Bench, at paragraph-5 held that it was only after
enactment of Section 66(A) dealing with the taxability of services rendered
abroad by a non-resident Indian in the hands of an Indian recipient that the Indi-
an recipient would be deemed to be a service provider and not prior thereto. Sec-
tion 66(A) was enacted only on 18-4-2006 and in the absence of a charging provi-
sion prior thereto, there could be no imposition of tax by way of a Rule. The va-
lidity of the Rule during the period 2002 to 18-4-2006 was struck down holding
that the respondents had no authority to levy Service Tax upon recipients of ser-
vices for non-resident Indians prior to 18-4-2006.
4. This decision was carried in appeal before the Supreme Court that
confirmed the same on 14-12-2009 [2010 (17) S.T.R. J57 (S.C.)]. The law thus stood
settled on 14-12-2009, to the effect that there could be no liability fastened upon a
service recipient, who had received services from non-resident service providers,
prior to introduction of Section 66(A).
5. The petitioner before me consequently sought refund of the tax paid
by it in terms of Rule 2(1)(d)(iv) which claim was rejected on 13-7-2010 by the
original authority. The order was reversed in first appeal by order dated
12-2-2013. In further appeal by the revenue, the Customs, Excise and Service Tax
Appellate Tribunal (in short ‘CESTAT’), by order dated 18-10-2013 [2016 (46)
S.T.R. 389 (Tri. - Chennai)] reversed the order of the Commissioner (Appeals)
making a distinction between a levy that is ‘without the authority of law’ and one
that was ‘unconstitutional’.
6. A Civil Miscellaneous Appeal in CMA. No. 1403 of 2015 was filed by
the petitioner before a Division Bench of this Court that by order dated 25-4-2017
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