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2024 (2) TMI 304 - AT - Service TaxTaxability - scope of the term gross amount charged - Outstanding dues from Associated Enterprises as per Section 92A of the Income Tax Act, 1961 - HELD THAT - The dispute herein is squarely covered in favour of Appellant/Assessee by the ruling of the Hon ble Delhi High Court in the case of THE PR. COMMISSIONER OF GST, DELHI -SOUTH COMMISSIONERATE VERSUS MCDONALDS INDIA PVT. LTD. 2017 (10) TMI 514 - DELHI HIGH COURT where it was held that The Court is satisfied that no error has been committed by the CESTAT in answering the issue in favour of the Assessee, viz., that the aforementioned amendments to the FA 1994 as well as the ST Rules cannot be made retrospective. The Impugned Order is set aside - appeal allowed.
Issues involved: Interpretation of Section 67 of the Finance Act, 1994 and Rule 6 of the Service Tax Rules, 1994 regarding payment of service tax on transactions with Associated Enterprises.
Summary: Issue 1: Interpretation of Section 67 and Rule 6 regarding payment of service tax on transactions with Associated Enterprises The Appellant, registered with the Service tax department, was paying service tax on taxable services as per the provisions of Section 67 of the Finance Act, 1994 and Rule 6 of the Service Tax Rules, 1994. An amendment in 2008 expanded the definition of "gross amount charged" to include transactions with Associated Enterprises, requiring service tax to be paid even if the consideration was shown as outstanding in the books of accounts. The Appellant was issued a Show Cause Notice proposing a demand for service tax, interest, and penalties on outstanding amounts from an Associated Enterprise. The Appellant contended that the amendments were prospective and could not be applied retrospectively. The Commissioner confirmed the duty demand, interest, and penalties. The Appellant appealed, citing a ruling by the Delhi High Court in a similar case favoring the Assessee. The Tribunal allowed the Appeal, setting aside the Impugned Order in favor of the Appellant/Assessee, granting consequential benefits as per the law. Conclusion: The Tribunal ruled in favor of the Appellant/Assessee, citing a precedent from the Delhi High Court, and set aside the Commissioner's order demanding service tax, interest, and penalties on transactions with Associated Enterprises.
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