2008 (2) TMI 83 - AT - Service Tax

C&F Agent authorities found that the balance sheet & ST-3 return showed that the appellant had received commission & handling charges on which the tax was payable assessee contend that Company maintains accounts on accrual basis so tax is not payable on amount shown as accrued but not received - whether the alleged receipts would fall within the ambit of rule 6(1) of STR is required to be considered no suppression so larger period not invocable mater remanded

Issues:
1. Liability of the appellant to pay Service Tax and Education Cess.
2. Applicability of Rule 6(1) of the Service Tax Rules, 1994.
3. Interpretation of the provisions under Section 66 and Section 68 of the Act.
4. Amendments to Rule 6 of the Service Tax Rules.
5. Consideration of accrual basis accounting and the presumption under Section 209(3)(b) of the Companies Act, 1956.
6. Examination of the balance sheet entries and the alleged receipt of commission and handling charges.
7. Applicability of the rule regarding payment of Service Tax on the value of taxable services received during a specific period.
8. Scrutiny of the balance sheets submitted by the appellant.
9. Plea of limitation raised by the appellant.
10. Setting aside of the Commissioner (Appeals) order and remittance of the matter for fresh consideration.

Analysis:

1. The appellant, a clearing & forwarding agent, contested the order of the Joint Commissioner imposing Service Tax and Education Cess for the period April 2002 to September 2005. The appellant acknowledged the liability to pay Service Tax but argued that payment should only be made upon receiving payments for the taxable services provided. The authorities found discrepancies in the balance sheet entries, indicating receipts that triggered the service tax liability.

2. The case revolved around Rule 6(1) of the Service Tax Rules, which specifies the manner of payment of Service Tax. The rule underwent several amendments, altering the deadlines for payment based on the receipt of taxable services. The appellant's argument relied on the accrual basis of accounting and the presumption under Section 209(3)(b) of the Companies Act, stating that payment should only be made upon actual receipt of payments.

3. Sections 66 and 68 of the Act outline the levy and payment of Service Tax on taxable services. The authorities held that the payment of Service Tax is contingent upon the value of the taxable service rendered, irrespective of the reimbursement by the service recipient. The appellant's contention that no consideration was received for services provided to specific clients was examined in light of these provisions.

4. The judgment highlighted the amendments to Rule 6 of the Service Tax Rules, emphasizing the importance of timely payment based on the receipt of taxable services. The period under dispute, spanning from April 2002 to September 2005, necessitated a detailed analysis of the rule as it stood during different timelines.

5. The appellant's plea regarding the limitation period was also addressed, with the need to examine the issue of suppression and the extended period for limitation. The judgment concluded by setting aside the Commissioner (Appeals) order and remitting the matter for fresh consideration on merits and limitation issues.

6. In conclusion, the judgment provided a comprehensive analysis of the issues concerning the appellant's liability for Service Tax, applicability of relevant rules and provisions, interpretation of accounting practices, and the necessity for a fresh decision considering all aspects of the case.

← Previous Next →