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2024 (3) TMI 798 - AT - Service TaxShort payment of service tax - Business Auxiliary Services - appellant submitted that the rate of service tax has changed from 10.2% to 12.24% w.e.f. 18.04.2006 and therefore the appellant was liable to pay the service tax @ 12.24 % only on the amount realized in respect of taxable services provided on or after 18.04.2006 - HELD THAT - It is found that the basis of the show cause notice is only that a sum of Rs.1,12,960/- is short paid by the appellant and no allegations have been made that these services were provided after the cut off date, i.e. 18.04.2006. The High Court of Delhi in VISTAR CONSTRUCTION (P) LTD/PIYARE LAL HARI SINGH BUILDERS PVT LTD VERSUS UNION OF INDIA AND ORS 2013 (2) TMI 52 - DELHI HIGH COURT , relying on the decision of the Apex Court in ASSOCIATION OF LEASING FINANCIAL SERVICE COMPANIES VERSUS UNION OF INDIA AND OTHERS 2010 (10) TMI 4 - SUPREME COURT , declared the Instruction invalid as it made the service tax chargeable on receipt of payment for the service. The Court held that the rate of tax applicable on the date on which the services were provided would be the one that would be relevant and not the rate of tax on the date on which payments were received as the taxable event under the Finance Act was providing or rendition of the taxable services. The Commissioner, while passing the impugned order has gone beyond the scope of the show cause notice in observing that the appellant have not produced or enclosed the copies of the relevant bills/invoices, the copies of the ledger of the parties to whom the invoices for the period on which rate of service tax at the rate of 10.2% was applicable so as to prove the services in respect of said realisation were rendered during the earlier period, when rate of service tax was 10.2% and in the absence thereof, it cannot be confirmed that services were rendered during the earlier period. As noticed above, the show cause notice is absolutely silent as to the reasons for raising the demand and hence the show cause notice is unsustainable. The impugned order deserves to be set aside and accordingly, the appeal is allowed.
Issues:
Challenge to Order-in-Appeal confirming service tax amount based on show cause notice. Details: The appellant, registered under 'Business Auxiliary Services,' received a show cause notice for short payment of service tax for the period 1.04.2006 to 30.09.2006. The demand was confirmed along with interest and penalty, which the appellant appealed. The appellant argued that the rate of service tax changed from 10.2% to 12.24% from 18.04.2006, and they should only pay the higher rate for services provided after that date. The Tribunal found that the show cause notice did not specify that the services were provided after 18.04.2006. The Tribunal referenced legal decisions to support that the liability to pay service tax arises based on the date services were provided, not when payment was received. The show cause notice was deemed unsustainable as it did not specify the reasons for raising the demand. The Commissioner's order was criticized for going beyond the notice by requiring additional documentation not mentioned in the notice. Consequently, the Tribunal set aside the impugned order and allowed the appeal. [Order pronounced on 6th March, 2024]
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