VMT SPINNING CO. LTD., ARISHT Vs. CCE

JUDGEMENT

(1.) THESE are applications by the appellant for waiver of pre -deposit of duty and penalty.

(2.) THE appeals are directed against the order of the Commissioner (Appeals) dated 23.7.2007 dismissing the appeals preferred by the appellants against the order of the Assistant Commissioner of Excise. The dispute relates to levy of service tax under Section 66 of the Finance Act, 1994, which provides for levy of service tax on the taxable services referred to in various sub -clauses of clause of Clause (105) of Section 65 of the Act. Section 68 which provides for payment of the service tax lays down that every person providing taxable service to any person shall pay service tax at the rate specified in Section 66 in such manner and within such period as may be prescribed. Sub -section (2) of Section 68, provides that notwithstanding anything contained in Sub -section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person i.e. by any other person in such manner as may be prescribed. It is relevant to mention here that by virtue of Section 66A inserted by the Finance Act, 2006, if any service specified in Clause (105) of Section 65 is received by a person in India, such service is to be treated as taxable service and the recipient thereof is liable to pay service tax thereon. However, the said provision came into force in April 2006 whereas the dispute in these appeals relates to the period prior to that. The appellant has nonetheless been held liable to pay service tax by virtue of the amendment, brought in Rule 2(1)(d) of the Service Tax Rules. By the said amendment which came into force from 16.8.2002, the following clause was inserted after Sub -clause (iii) of Clause (d): 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 person receiving taxable service in India.

(3.) IT was submitted on behalf of the Revenue that in terms of Sub -section (2) of Section 68 the Central Government is competent to specify the person, other than the service provider, liable to pay service tax in relation to specified services notwithstanding the provisions of Sub -section (1) of Section 68 in terms of which service provider alone is liable to pay service tax. It was submitted that in exercise of the rule making power conferred by Section 94(1) and (2) of the Finance Act 1994 the Central Government amended the Rules making recipient of service liable to pay the tax by reason of Section 2(1)(d) of the Service Tax Rules.