2015 (3) TMI 179 - AT - Service Tax

Quantification of assessee's liability - Determination on the basis of date of receipt of services or date of payment for service - Held that - date of receipt of the services by the appellant, is crucial for the determination of exigibility of Service Tax and not the date of payment for the receipt of service. This position is settled by the Hon'ble High Court of Delhi in the case of Consulting Engineering Services (2013 (1) TMI 434 - DELHI HIGH COURT) and Vistar Construction Ltd. (2013 (2) TMI 52 - DELHI HIGH COURT). Therefore, the matter has to go back to the adjudicating authority for ascertaining the date of receipt of services by the appellant for which they had made payments to the service provider abroad. The appellant is directed to furnish documentary evidence in this regard i.e. the date of receipt of services, so that the adjudicating authority can consider the evidence and thereafter, determine the appellant's liability to Service Tax, if any - Decided in favour of assessee.

Summary

Issues:
Service Tax demand under Reverse Charge Mechanism for services received prior to 18.4.2006, overlapping of service periods, liability determination based on service receipt date.

Analysis:

1. Service Tax Demand and Liability:
The judgment involves an appeal against a Service Tax demand of &8377; 1,58,34,571/- confirmed under the Reverse Charge Mechanism for services received by the appellant between 18.4.2006 to 31.3.2008. The services were categorized under Business Auxiliary Services, Management & Consultancy Services, and Consulting Engineers Service. The appellant contended that services were received prior to 18.4.2006, making them not liable for Service Tax, even though payments were made post-18.4.2006. The appellant relied on precedents emphasizing that the tax rate should apply based on the service rendering date, not payment date. The appellant requested a remand for the adjudicating authority to consider evidence regarding service receipt dates.

2. Overlapping Service Periods:
The Revenue argued that there was an overlap in service periods, with services rendered both before and after 18.4.2006, making the appellant liable for Service Tax for post-18.4.2006 services. However, the Revenue did not object to a remand for fresh consideration by the adjudicating authority based on evidence submitted by the appellant.

3. Liability Determination:
The Tribunal noted that the crucial issue was determining the date of service receipt by the appellant, not the payment date, to ascertain Service Tax liability. Citing previous decisions, the Tribunal emphasized that the date of service receipt is pivotal for tax liability determination. The matter was directed back to the adjudicating authority for establishing the service receipt dates based on documentary evidence provided by the appellant. The appeal was allowed for remand, and the stay petition was disposed of.

In conclusion, the judgment addressed the factual issue of service receipt dates to determine Service Tax liability under the Reverse Charge Mechanism. The Tribunal emphasized the significance of service receipt dates over payment dates in tax liability assessment, directing a remand for the adjudicating authority to consider evidence regarding service receipt dates provided by the appellant.