2009 (3) TMI 459 - AT - Service Tax

Enhancement of the rate of service tax- The rate of service tax has been enhanced from 8 per cent to 10 per cent with effect from 10-9-2004. The appellant, a PSU, had raised the bills for the month of August payable in September. According to the learned Advocate, as the services were rendered in August, 2004, the rate of tax applicable is only 8 per cent even though bills have been raised, payments have been received in September, 2004. In respect of PCO, they had a billing cycle of fortnight and, therefore, bills for the fortnight from 1-9-2004 to 15-9-2004 had been raised and during this period, rate of 8 per cent was applicable for part of the period and higher rate of 10 per cent for the rest of the period. Held that- we set aside the orders of the Commissioner (Appeals) and that of the original authority and remand the matter to the original authority for consideration of the submissions and the evidence. The appeal is allowed by way of remand.

Summary

Issues:
1. Rate of service tax applicable - 8% to 10% change.
2. Billing cycle and tax calculation for services rendered.
3. Correct appreciation of evidence by lower authorities.
4. Remand of the matter for further consideration and evidence submission.

Analysis:

1. Rate of service tax applicable - 8% to 10% change:
The appellant, a PSU, raised bills for services rendered in August 2004, payable in September. The rate of service tax had been increased from 8% to 10% with effect from 10-9-2004. The argument presented was that as services were rendered in August, the tax rate should be 8%, even though bills were raised and payments received in September. For PCO services with a fortnightly billing cycle, the tax rate of 8% applied for part of the period and 10% for the rest. The contention was that correct tax calculations were made based on the billing cycle, despite the lack of a clear breakdown in the computer printouts.

2. Billing cycle and tax calculation for services rendered:
The Tribunal observed that the evidence regarding the billing cycle and tax calculation had not been adequately presented or appreciated by the lower authorities. In light of this, the orders of the Commissioner (Appeals) and the original authority were set aside. The matter was remanded to the original authority for a reevaluation of the submissions and evidence. The appellants were directed to provide the necessary evidence within one month for a proper assessment, with the original authority instructed to decide on the issue after granting a reasonable opportunity for a hearing.

3. Correct appreciation of evidence by lower authorities:
The Tribunal noted that the evidence crucial for determining the correct tax liability had not been properly considered by the lower authorities. In order to ensure a fair assessment, the Tribunal decided to remand the matter for a fresh evaluation, emphasizing the importance of a thorough review of the submissions and evidence provided by the appellants.

4. Remand of the matter for further consideration and evidence submission:
Ultimately, the appeal was allowed by way of remand, and the stay petition was also disposed of. The Tribunal's decision to remand the matter underscored the significance of a comprehensive review of the evidence and submissions to arrive at a just and accurate determination of the tax liability in question.