2017 (9) TMI 880 - AT - Service Tax

Rate for levy of tax - works contract service - Held that - the issue has been decided by the Hon ble Delhi High Court in the case of CST Vs Ratan Singh Builders Pvt. Ltd. 2013 (5) TMI 450 - DELHI HIGH COURT , where it was held that the rendition of the service had been completed prior to 01.03.2008 and, therefore, the taxable event had occurred prior to 01.03.2008. Consequently, the applicable rate of tax would be the rate which was prevalent prior to 01.03.2008 - service tax is payable at the rate applicable on the day of rendering/ receiving the service - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Appeal against dropping of demand of ?16,51,892/- by Commissioner of service tax.
2. Applicability of service tax rate based on payment receipt date or service rendering date.

Analysis:
1. The Commissioner of service tax appealed against the dropping of the demand of ?16,51,892/- by the Respondent Assessee, M/s Trimoorti Electricals. The Revenue contended that the service tax rate should be based on the day of payment receipt by the assessee. On the other hand, the Respondent argued that the service tax rate should be applicable on the day when the service was rendered. The issue was decided based on the interpretation of the taxable event in relation to service tax.

2. The Hon'ble Delhi High Court and the Tribunal provided significant judgments on the matter. In the case of CST Vs Ratan Singh Builders Pvt. Ltd., the Delhi High Court emphasized that the taxable event for service tax is the rendition of the service, not the payment receipt date. The Court held that the applicable rate of tax should be based on the date when the service was rendered, not when the payment was received. Similarly, in the case of CST Delhi Vs Bagai Construction, the Tribunal reiterated that the rate of tax should be determined based on the date of service rendering or receiving, not the payment date.

3. Based on the legal precedents and interpretations, the Tribunal upheld that service tax is payable at the rate applicable on the day of rendering or receiving the service. Therefore, the dropping of the demand of ?16,51,892/- was sustained, and the appeal by the Commissioner of service tax was dismissed for lacking merits. The judgment clarified the correct interpretation of the taxable event for service tax and the relevant date for determining the applicable tax rate.

This detailed analysis of the judgment highlights the legal interpretations, precedents, and conclusions drawn by the Tribunal regarding the issues raised in the appeal.