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2017 (10) TMI 512 - AT - Service TaxInterpretation of statute - Section 67 as well as rule 6(1) of Service Tax Rules, 1994 were amended on 10-5-2008 - effective date of amendment - retrospective or prospective effect to amendment? - Held that - CBEC vide letters No. 334/1/2008 dated 29.02.2008 clarified that service tax is required to be paid after receipt of payment or crediting/debiting of the amount in the books of accounts, whichever is earlier - reliance also placed in the decision in the case of SIFY TECHNOLOGIES LTD. Versus COMMISSIONER OF C. EX. & ST., LTU, CHENNAI 2010 (11) TMI 232 - CESTAT, CHENNAI , where it was held that no retrospective effect can be given to the changes made in the Rules and in the Finance Act on 10-5-2008 - demand for the period prior to 10-5-2008 cannot be sustained. Moreover demand for period prior to 18-4-2006 cannot be sustain on the appellant on the ground that Section 66A was introduced only on 18-4-2006. Extended period of limitation - Held that - Tribunal in the case of General Motors India Pvt ltd Vs. Commissioner of Central Exicse, Pune 2015 (9) TMI 1097 - CESTAT MUMBAI , has roughly in similar circumstances set aside the invocation of extended period - extended period not invokable - extended period cannot be invoked in this case. Royalty - taxability - interpretation of statute - Rule 6(1) of Service Tax Rules, 1994 - demand of interest - Held that - identical issue has been dealt with by the Tribunal in the case of Sify Technologies Ltd. v. CCE & ST, LTU, Chennai, wherein the Tribunal has held that the Explanation added to Rule 6(1) of Service Tax Rules, 1994 cannot be given retrospective effect. The ratio of the above judgment of the Tribunal is squarely applicable to the facts of this case and just on account of use of the words for the removal of doubts in the Explanation to Rule 6(1), this explanation cannot be treated as a clarificatory explanation having retrospective effect - the demand for the interest for alleged delay in discharging service tax liability by the due date is not sustainable. The matter is remanded to the original adjudicating authority for re-calculating the liabilities - appeal allowed by way of remand.
Issues Involved:
1. Confirmation of demand of service tax. 2. Imposition of penalty. 3. Retrospective application of amendments to Section 67 of the Finance Act and Rule 6 of the Service Tax Rules. 4. Invocation of the extended period of limitation. Detailed Analysis: 1. Confirmation of Demand of Service Tax: The appellant, M/s. Sempertrans Nirlon (P) Ltd, contested the demand for service tax levied on transactions with associated enterprises. The counsel argued that the amendments to Section 67 of the Finance Act and Rule 6 of the Service Tax Rules, effective from 10-5-2008, should not have retrospective effect. These amendments included payments credited or debited in the books of account within the definition of "gross amount charged" for taxable services. The Tribunal referenced the case of Sify Technologies Ltd, which concluded that such amendments could not be applied retrospectively. Consequently, the demand for service tax for the period prior to 10-5-2008 was deemed unsustainable. 2. Imposition of Penalty: The appellant argued against the imposition of penalties, citing the case of General Motors India Pvt Ltd, which held that penalties should not be imposed under similar circumstances. The Tribunal acknowledged this precedent and ruled that the extended period of limitation and penalties could not be invoked, as the appellant had discharged the duty on the entire amount paid. 3. Retrospective Application of Amendments: The Tribunal examined the amendments to Section 67 and Rule 6, noting that the explanation added was intended to clarify that service tax is payable on amounts credited or debited in the books of account for transactions with associated enterprises. However, it was determined that these amendments were not intended to have retrospective effect. This conclusion was supported by the Tribunal's decision in the case of Gecas Services India Pvt. Ltd, which held that such explanations, even if stated for the removal of doubts, should not be applied retrospectively. 4. Invocation of the Extended Period of Limitation: The Tribunal considered whether the extended period of limitation could be invoked in this case. Despite the clear provisions post-10-5-2008, the appellant failed to discharge the duty liability on time. However, referencing the decision in General Motors India Pvt Ltd, the Tribunal ruled that the extended period could not be invoked, and penalties should not be levied. The Tribunal also noted that for services provided prior to 10-5-2008, the liability would arise only when actual payments were made, aligning with the decision in Gecas Services India Pvt. Ltd. Conclusion: The Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for recalculating the liabilities based on the principles established. The demand for the period prior to 10-5-2008 was not sustained, and the extended period of limitation and penalties were not applicable. The case was pronounced in court on 18/9/17.
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