2018 (9) TMI 1375 - AT - Service Tax

Levy of Service Tax - advance received from the service recipient, called Mobilization Charges - Held that - Inasmuch as in the present case, the Commissioner (Appeals) has remanded the matter for verification of the factual aspects, disputed legal issue can also be remanded for fresh consideration in the light of the earlier remanded matters - appeal allowed by way of remand.

Summary

Issues:
1. Whether mobilization charges received by the appellant are liable to service tax.
2. Whether interest liability accrues against the appellant for not discharging tax liability immediately on receipt of mobilization charges.

Analysis:
1. The appellant, engaged in providing construction services, received mobilization charges from the service recipient. The Revenue contended that these charges, being part of the service value, required service tax payment. The Original Adjudicating Authority confirmed a demand of ?42,26,430 along with interest and penalty. On appeal, the Commissioner (Appeals) noted that the charges were included in the service value on which tax was paid. However, he disagreed that the tax liability needed immediate discharge upon receipt of charges, holding that interest would accrue against the appellant.

2. The appellant argued that as per the Point of Taxation Rules effective from 01/04/2011, tax payment is due upon bill issuance, not immediately on receipt of charges. Referring to a previous Tribunal order related to a similar demand, the appellant sought remand for fresh consideration. The Revenue did not object. Consequently, the Tribunal set aside the order, remanding the matter to the Commissioner for a fresh decision along with the earlier remanded cases. The appeal was allowed by way of remand.

This judgment primarily addresses the tax liability concerning mobilization charges received by the appellant for construction services and the timing of tax payment, emphasizing the application of relevant rules and precedents for a fair determination.