2018 (4) TMI 544 - AT - Service Tax

Applicable rate of service tax - date of rending of rendering of service or date of receipt of amount - appellant is a Chartered Accountant firm, undertaking various professional activities in audit, accounting, taxation, etc. for its clients - POPOS Rules - Held that - in respect of the taxable service provided prior to 10/09/2004, the appellant had claimed service tax at the prevailing rate of 8% - differential duty cannot be demanded. CENVAT credit - service tax paid by other Chartered Accountant firm - input services - Held that - the phrases such as, accounting, auditing and financing are specifically finding place in the inclusive part of the definition of input service, for the purpose of Cenvat credit - Since, the appellant had availed the Chartered Accountant service for accomplishing the purpose of its business, the same should be considered as input service - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Service tax liability determination based on the date of provision of service.
2. Availability of Cenvat credit for input services like accounting, auditing, and financing.

Analysis:

Issue 1: Service tax liability determination based on the date of provision of service
The appellant, a Chartered Accountant firm, faced a service tax demand for short payment and denial of Cenvat credit by the Department. The Department contended that the service tax liability should not be based on the date of receipt of service tax but on the date of provision of service. The appellant argued that they correctly paid service tax at 8% on the value of taxable services provided. The Tribunal examined the invoices and found that the appellant had indeed paid service tax at the prevailing rate of 8% for services provided before a specific date. The Tribunal held that the differential service tax could not be confirmed against the appellant, as they had discharged the liability correctly based on the date of provision of services.

Issue 2: Availability of Cenvat credit for input services like accounting, auditing, and financing
The appellant also contested the denial of Cenvat credit on services received from another Chartered Accountant firm, arguing that such services fell under the definition of input services as per the Cenvat Credit Rules. The Tribunal noted that services like accounting, auditing, and financing were explicitly included in the definition of input services for Cenvat credit. As the appellant had utilized these services for their business activities, the Tribunal concluded that the appellant was entitled to avail Cenvat credit for the services received. Consequently, the Tribunal found no merit in the impugned order and allowed the appeal in favor of the appellant, setting aside the earlier decision.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the service tax liability should be determined based on the date of provision of services and that Cenvat credit should be available for input services like accounting, auditing, and financing.