2014 (6) TMI 556 - AT - Service Tax

Effective Rate of service tax - enhanced of rate of service tax from 8% to 10.2% - Assessee contends that service was provided prior to enhancement date - Held that - appropriate rate at which tax is leviable is the date of occurrence of the taxable event and in the case of service tax is the date of rendition of the service. In view of this position in law, the assumption to the contrary by the learned primary and appellate Authorities that the appellant is liable to levy and collection of service tax, at the rate prevalent on the date of receipt of consideration for the taxable service provided, is fundamentally misconceived and unsustainable. Since both the authorities have recorded that there was no material on record to support the appellant s claim as to having provided the taxable service prior to increase in the rate of taxation; and since the learned Counsel of the appellant Shri Batra contends that there is sufficient and credible evidence to establish this claim, we consider it appropriate to remit the matter to the appellate Authority, to ascertain whether the taxable services were provided by the appellant prior to 10/09/04 - Matter remitted back - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of service tax demand, penalty, and interest.
2. Applicability of service tax rate based on the date of taxable event.
3. Interpretation of the date for determining the appropriate rate of service tax.
4. Remittance of tax at increased rates based on the date of service provision.

Analysis:
1. The judgment addresses the confirmation of service tax demand, penalty, and interest by the Superintendent, Central Excise, Range IV, Division I, New Delhi. The appellant's appeal against this decision was rejected by the Commissioner (Appeals), Faridabad IV, leading to a balance liability dispute of Rs. 68,069.

2. The petitioner argued that service tax was remitted at the appropriate rates of 5% or 8% based on the date of service provision, not the date of consideration receipt. Both Authorities, however, assumed the date of receipt of consideration as the relevant date for determining the tax rate. The judgment cites precedents from the Delhi High Court emphasizing that the date of occurrence of the taxable event, i.e., the date of service provision, should dictate the applicable tax rate.

3. Referring to legal principles established by previous court decisions, the judgment highlights that the date of rendition of the service, not the date of consideration receipt, is crucial in determining the service tax rate. The Authorities' failure to consider this principle and lack of factual evidence supporting the appellant's claim necessitated the remittance of the matter to the appellate Authority for further investigation.

4. Consequently, the impugned order by the appellate Commissioner was quashed, and the matter was remitted for a fresh determination on whether the taxable services were provided by the appellant before the amendment of tax rates. If proven, the appellant would not be obligated to remit tax at increased rates merely due to subsequent consideration receipt. The judgment concludes without imposing any costs, emphasizing the importance of establishing the date of service provision for determining the applicable service tax rate.