INDIAN NATIONAL SHIPOWNERS ASSOCIATION Vs. UNION OF INDIA

JUDGEMENT

(1.) By this petition the petitioners challenge the constitutional validity of the following: -(i) Section 66-A 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(1)(d)(iv) of the Service Tax Rules, 1994 inserted with effect from 16th August, 2002;

(2.) On the basis of the above provisions the respondents are seeking to levy and recover service tax from the persons resident in India on the services which are rendered and/or performed out side India by non-resident service providers. By the aforementioned provisions although the services are performed out side India, the tax is sought to be levied and collected from the recipient of these services, who is based in India.

(3.) The petitioner No. 1 is the Indian National Ship Owners Association which is registered as a not-for-profit company under section 25 of the Companies Act, 1956, and whose members are owners of Indian Flag Vessels. Currently, the petitioner No. 1 has 32 members with a combined gross registered tonnage of 7.2 million tonnes, which represents 90% of the total Indian tonnage. The petitioner No. 2 is a National and Citizen of India and is a shareholder of various companies which are members of petitioner No. 1, inter alia, engaged in the operation of ships.