CCE Vs. HINDUSTAN MOTORS LTD

JUDGEMENT

(1.) LD . Counsel Shri Ramesh Nair submits that when the service recipient was not liable to tax in respect of the service of technical information and assistance, there shall be no recovery of the Service Tax from the recipient under law. All the three Appeals relate to the Adjudication made for the service period from 1.4.98 to 31.6.05. He relies on the judgment of the Hon'ble Court of Bombay in the case of Indian National Shipowners Association v. Union of India reported in, 2009 (13) STR 233 (Bom.) and submits the recipient of certain category of services were not liable to tax prior to 18.4.06. When the services were received from abroad before such date, in absence of statutory provision, the Adjudication made for levy of Service Tax on the Appellants are unsustainable.

(2.) LD . DR Shri Sansar Chand submits that there is a Larger Bench decision in the case of Hindustan Zinc Ltd. v. CCE reported in : 2008 (11) STR 338 (Tri. - LB) holding that levy of Service Tax is on rendering of taxable service and not on person. Therefore relying on the decision in the case of Hindustan Zinc (supra), the Adjudication sustained. He also relies on the decision of Hon'ble High Court of Rajasthan in the case of Union of India v. Aditya Cement reported in : 2008 (10) STR 228 for arguing that services being taxable, from whom that tax is realisable is immaterial.

(3.) THERE is no dispute by Revenue that the Appellant was recipient of certain services relating to the period 1.4.98 to 30.6.05. This is certainly the period prior to 18.4.2006. When payment of Service Tax was called for from the recipient of services from 18.4.06, this Appellant should not suffer following decision of Hon'ble High Court of Bombay in the case of Indian National Shipowners Association (supra). We have looked into the provisions of Section 68 of the Finance Act 1994. In terms of Sub -section 2 (sic) power has been reserved for the Central government to notify the persons who shall pay taxes when the normal rule of law under Sub -section (1) of Section 68 is that the service provider has to pay tax. Also we have looked into Section 66A of the Finance Act 1994. Before (sic) Section 66A was enacted there was no authority under law to realise levy of service tax from a person who is recipient in India receiving certain service from outside India. All these aspects have been dealt by the Hon'ble High Court of Bombay in the case of Indian National Shipowners Association . Therefore the Larger Bench decision in the case of Hindustan Zinc Ltd. which was rendered on 27.6.2008 had no occasion to get the benefit of decision of Hon'ble High Court of Bombay made in Indian National Shipowners Association rendered on 11.12.08. Therefore law laid down by Hon'ble High Court of Bombay shall govern the field instead of Larger Bench decision. Similarly Revenue's reliance on the decision of Hon'ble High Court of Rajasthan was on the context of Section 66(2) of the Finance Act 1994. The Appeal of Revenue was dismissed in that case. Even following the ratio laid down by Hon'ble High Court of Rajasthan that when there was no notification for liability, Revenue has no scope to argue further in the present Appeals when there was no enactment to faster liability in all the three Appeals under Section 66(A) of the Finance Act 1994. Further, decision of Hon'ble High Court of Bombay was made on 11.12.08 while the decision in Aditya Cement was made by the Hon'ble High Court of Rajasthan was made on 26.2.08.