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TMI Blog2013 (2) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... ich came into effect only on or after 01.03.2008. Thus it is not receipt of payment which is the taxable event but the rendition of service. It should also be mentioned that at that point of time neither was Rule 5B of the Service Tax Rules, 1994 in effect nor was Section 67A of the Finance Act, 1994 inasmuch as the latter provision was inserted in 2012 which came in effect from 28.02.2012. Furthermore, even Rule 4(a)(i) of the Point of Taxation Rules, 2011 was not applicable to the facts of the present case in as much as those rules also came into effect much later in 2011. As decided in Commissioner of Service Tax Vs. Consulting Engineering Services (I) Pvt. Ltd. [2013 (1) TMI 434 - DELHI HIGH COURT] wherein held that in the absence of any rules, we would have to examine as to what is the taxable event. In that context we had held that the taxable event as per the Finance Act, 1994 was the providing or rendition of the taxable services. This is exactly what the Supreme Court had held in Association of Leasing & Financial Service Companies (2010 (10) TMI 4 - SUPREME COURT OF INDIA). Therefore, the rate of tax applicable on the date on which the services were rendered would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.04.2008, the rate of service tax is to be determined based on the date of receipt of payment and not on the date of rendition of service. 4. Before we deal with this issue on the point of law it would be appropriate for us to indicate certain other facts. In WP(C) 5636/2010 the challenge is both to the instruction dated 28.04.2008 as also to the show cause notice dated 16.02.2009 but, only to the extent that a demand is sought to be raised based on the issue of rate of service tax to the extent of ₹ 1,43,191/- which is bifurcated into two amounts of ₹ 1,39,021/- being the service tax element and ₹ 4,170/- being the education cess on the said service tax element. It is clearly understood by the petitioner and the respondent that the challenge to the show cause notice dated 16.02.2009 is only limited to this demand of ₹ 1,43,191/- and insofar as the remaining portion of the show cause notice is concerned that is not the subject matter of this writ petition and has been challenged separately by way of another writ petition with which we are not concerned today. 5. In so far as the WP(C) 3632/2012 is concerned that petition also challenges the instruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s service tax. However, the rate of 2% has been revised to 4% with effect from 1.3.2008. Commissioner (ST), Delhi has indicated his view that the applicable rate would be the rate prevailing on the date the services were agreed to be provided and not the date of actual provision of service. 3. As per section 66 of the Finance Act, 1994, service tax shall be levied at the rate of 12% of the value of the taxable service. Section 67 pertains to valuation of taxable services for charging service tax. As per rule 6(1) of Service Tax Rules, 1994, service tax is required to be paid by the 5th of the month immediately following the calendar month in which the payments are received towards the value of taxable services. Service tax shall, therefore, become chargeable on receipt of payment and on the amount so received for the service provided or to be provided, whether or not services are preformed. The rate applicable to a taxable transaction shall be the rate in force at the time the service tax becomes chargeable. This is a well settled legal position. The date on which the services were agreed to be provided has no relevance to determine the applicable tax rate when the service is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as much as those rules also came into effect much later in 2011. Recently, we had to consider a similar issue in Commissioner of Service Tax Vs. Consulting Engineering Services (I) Pvt. Ltd. in St.Appl.76/2012 decided on 14.01.2013 wherein we held that in the absence of any rules, we would have to examine as to what is the taxable event. In that context we had held that the taxable event as per the Finance Act, 1994 was the providing or rendition of the taxable services. This is exactly what the Supreme Court had held in Association of Leasing Financial Service Companies (supra). 10. Therefore, the rate of tax applicable on the date on which the services were rendered would be the one that would be relevant and not the rate of tax on the date on which payments were received. The instruction dated 28.04.2008 which is contrary to the law declared by the Supreme Court is clearly invalid. In Commissioner of Central Central Excise, Bolpur Vs. Ratan Melting Wire Industries 2008 (12) STR 416 (SC), a constitution bench of the Supreme Court observed as under: Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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