2002 (12) TMI 441 - AT - Service Tax

Summary

Issues:
Service tax liability on services provided to customers from July 1994 to September 1998.

Analysis:
The judgment concerns the appeal regarding the service tax allegedly not paid by the appellants for services provided to their customers. The appellant's representative argued that a significant portion of the amount on which tax was levied belonged to cancelled bills and un-realized amounts from customers. They contended that no service tax should be paid on cancelled bills, and tax liability arises only upon realization of consideration for services provided. Reference was made to Section 65(16) of the Finance Act, 1994, defining "taxable service," and the impact of the Finance (No. 2) Act, 1998, which substituted "received" with "charged." The representative also cited a Delhi-II Commissionerate's Trade Notice and a Supreme Court decision to support the argument that service tax is leviable only on the amount actually received by the service provider.

Regarding the tax demanded for July 1994, it was argued that the Finance Act, 1994, related to service tax was received after July 1, 1994, and thus, there was no scope for levying service tax on rental in bills issued in July 1994. Additionally, the representative contended that no service tax was leviable on the surcharge collected for delayed payment on telephone bills, citing a Board's Service Tax Circular. The imposition of personal penalty and confirmation of interest were also challenged.

However, it was acknowledged that these issues were not raised before the Commissioner, and the appellant did not have the opportunity to address them. Given that the disputed issues involved factual aspects, the matter was remanded to the original adjudicating authority for a fresh decision, considering the appellant's submissions. The appellants were granted the opportunity to present their case before the Commissioner and raise the above arguments. The appeal was disposed of accordingly, emphasizing the appellants' right to address the issues at the original level.