2009 (8) TMI 738 - AT - Service Tax

Waiver of pre-deposit valuation reimbursement - matter remanded before 19-4-2006 and pre-deposit for such period not required - period relating to the period before 19-4-06, the services provided earlier for which the value has been received subsequently are taxable - tax is required to be paid as and when values for such services are received - not find a case for complete waiver of predeposit - recovery stayed during pendency of the appeal

Summary

Issues: Determination of tax liability for services provided before and after the introduction of new Valuation Rules, admissibility of deductions towards reimbursements, requirement for predeposit, applicability of legal provisions for tax calculation.

Analysis:

1. The appellants argued that for the period before 19-4-2006, there should be no requirement for predeposit as the matter was remanded by the adjudicating Commissioner. They contended that for the subsequent period from 19-4-06 to 30-9-06, they had paid a portion of the demanded amount after realizing their additional tax liability due to the new Valuation Rules. The appellants claimed that deductions towards reimbursements were admissible based on Board's circular prior to the introduction of the Valuation Rules, even if the value of the service was received after 19-4-06. The appellants relied on certain decisions to support their argument.

2. The Department, represented by the ld. DR, opposed the claim for waiver of predeposit. They argued that since the appellants received the value for services after 19-4-06, their tax liability should be determined based on the Rules in force at that time. The Department contended that the deductions claimed by the appellants were part of the value of the service provided and thus should not be excluded from tax calculation.

3. Upon considering the submissions from both sides, the Tribunal found that for the period before 19-4-06, the appellants were not required to predeposit any amount as the matter was remanded for re-computation of tax. However, for the subsequent period from 19-4-06, the Tribunal observed that the decisions cited by the appellants were not directly applicable. The Tribunal noted that services provided earlier but for which the value was received later were taxable, and the tax should be paid when the values for such services are received. The Tribunal held that the valuation and tax rates should be determined based on the legal provisions in force at the time the taxable value is received. Consequently, the Tribunal directed the appellants to predeposit an additional amount towards tax, considering their financial difficulties and the amount already paid, while waiving the predeposit of the balance amount subject to compliance.

This comprehensive analysis highlights the key arguments presented by both parties, the Tribunal's evaluation of the legal provisions, and the decision reached regarding the requirement for predeposit and tax liability calculation for services provided before and after the introduction of new Valuation Rules.