Explanation 2 to Rule 5 of POT is ultra vires

Exactly, section 66B creates “charge” or “levy” for imposition of tax but the time when it was levied, the rate was 14%+0.5%. There was no KKC at all. The question is once it was not leviable, how one can collect at later stage?

Section 67 is for determining the value of taxable service and for collection one shall apply POT. As stated by you, “APPLICABLE RATE OF TAXES” and applicable rate is prevailing at the time when service was rendered or advances received.

Now therefore, since the time when service was rendered or advances were collected, there was no levy at the first stage. Hence, KKC cannot be collected based on explanation.

Reliance can also be place on Hon’ble Supreme Court decision of Vazir Sultan Tobacco Co. Limited 1996 (83) ELT (3) SC.

Monarch Bhatt 03/03/2016