The main legal point established in the judgment is that the respondents' action in rejecting the refund claim was illegal in light of the settled position of law established by the Bombay High Court in Indian National Shipowners Association (supra) and the relevant provisions of the Service Tax Rules, 1994 and the Finance Act, 1994.

JUDGMENT :

1. The present appeal is filed by the appellant being aggrieved with the rejection of refund claim of Rs.4,69,561/-by the respondents in respect of services rendered from a non resident service provider for the period prior to 31.12.2004.

2. While admitting the appeal, following question of law was framed by this Court :

“Whether it was open to the respondent to recover the amount of service tax before issuing notification under Section 68(2) of the Finance Act, 1994?”

3. The respondent contested the appeal while claiming that in view of provision of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, the tax paid by the appellant in respect of services rendered from the non resident service provider is liable to be refunded.

4. Learned counsel for the appellant has submitted that the question regarding payment of service tax in respect of services rendered from the non resident service provider has already been decided by the Bombay High Court in Indian National Shipowners Association Vs. Union of India, MANU/MH/1312/2008, wherein it is clearly held that the respondent department cannot levy service tax for the services received from a non resident service provider for the period prior to 18.04.2006. It is submitted that the SLP filed on behalf of the respondents against the decision rendered by the Bombay High Court in Indian National Shipowners Association (supra) has already been dismissed by the Hon’ble Supreme Court on 14.12.2009.

5. It is submitted that the Gujarat High Court in the case of the Commissioner, Service Tax Vs. Quintiles Data Processing Centre (I) Pvt. Ltd., MANU/GJ/1306/2011 and the Madras High Court in the case of Enmas Andritz Pvt. Ltd. Vs. Asstt. Commissioner of S.T., MANU/TN/0800/2019 has followed the decision of the Bombay High Court rendered in the case of Indian National Shipowners Association (supra).

6. Learned counsel for the respondents is not in a position to dispute the above settled position of law.

7. The Bombay High Court in the case of Indian National Shipowners Association (supra) has held as under :

“17. Reliance is placed on the provisions of Rule 2(1)(d)(iv) quoted above for justifying the levy of service tax for the period from 16-8-2002. Perusal of the above quoted Rule 2(d)(iv) shows that by that provision a person liable for paying the service tax was defined to mean in relation to any taxable service provided by a person who is non-resident or is from outside India to a person receiving taxable service in India. Apart from the fact that this rule is contrary to the provisions of Section 68 and other provisions of the Act, under this provision the recipient of the service became liable for paying the service tax provided the service was received in India. The entire case of the Petitioners is in relation to the service received by the vessels and ships owned by the members of the Petitioner-association outside India. Therefore, it cannot be said that on the basis of Rule 2(1)(d)(iv), service tax can be levied on the members of the Petitioners-association. It is further to be seen here that Section 64 gives powers to the Central Government to make rules for carrying out the provisions of the Chapter. The chapter relates to taxing the services which are provided, the taxing on the value of the service and it is only the person who is providing the service can be regarded as an assessee. The rules therefore, cannot be so framed as not to carry the purpose of the Chapter and cannot be conflicted with the provisions in Chapter V of the Act. In other words, as the Act makes the person who is providing the service liable, the provisions in the Rules cannot be made which makes the recipient of the service liable. It is, thus, clear that the provisions of Rule 2(1)(d)(iv) are clearly invalid.

18. So far as reliance placed on the notification dated 31-12-2004 for justifying levy of service tax from the members of the Petitioners-association is concerned, that notification has been issued unde