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TMI Blog2017 (10) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... any other name, in books of account of a person liable to pay service tax" Section 67 of the Finance Act was amended on the same day to include in the ambit of the term payment of any amount credited in the books of account of a person liable to pay service tax where the transaction of taxable service is with any associated enterprise. Ld. Commissioner pointed out that they were paying service tax on reverse charged basis in respect of certain services received from their associated enterprises located abroad. After introduction of above amendment, revenue sought to demand of duty on the transaction from 2005-06 onward, vide Show cause notice issued on 26th March, 2012. Ld. Counsel pointed out that the demand has been based by the revising the date on which liability to pay service tax arose in terms of amendment made in the Section 67 of the Finance Act and Service Tax Rules w.e.f. 10-5-2008. Ld. Counsel pointed out that the appellants have paid duty considering the date of payment as date on which liability of service tax arose. He particularly pointed out to the chart appearing as annexure to the show cause notice as a proof of same. 2.1 Ld. Counsel pointed out that show cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y an explanation was added to Rule 6 of the Service Tax Rules which reads as under: "Explanation- "For the removal of doubts" it is hereby declared that where the transaction of taxable service is with any associated enterprises, any payment received towards the value of taxable service, in such case shall include any amount credited or debited, as the case may be, to any account, whether called Suspense account or any other name, in books of account of a person liable to pay service tax" In this regard CBEC vide letters No. 334/1/2008 dated 29.02.2008 clarified as follows:- "6. Transactions between associated enterprises : 6.3 As an anti-avoidance measure, it is proposed to clarify that service tax is leviable on taxable services provided by the person liable to pay service tax even if the amount is not actually received, but the amount is credited or debited in the books of account of the service provider. In other words, service tax is required to be paid after receipt of payment or crediting/debiting of the amount in the books of accounts, whichever is earlier. However, this provision is restricted to transaction between associated enterprises. This provision shall also app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in the facts of the present case, as the Tribunal held in that case that clarificatory amendments are retrospective only when they did not materially change, the existing provisions, while in the instant case, there was no provision either in Section 67 of the Finance Act or Rule 6 of the Service Tax Rules to suggest that in the case of transactions between associated enterprises, service tax has to be paid immediately on entry of the transaction in the books of account. In view of the above decision, demand for the period prior to 10-5-2008 cannot be sustained. Moreover demand for period prior to 18-4-2006 cannot be sustain on the appellant on the ground that Section 66A was introduced only on 18-4-2006. 5.1 The next issue to be visited is if the extended period can be invoke in these circumstances. On 10-5-2008 Section 67 of the Finance Act and Service Tax Rules 1994 were amended and specific provisions were brought in place for transaction between associate enterprises. There is no doubt about manner in which the duty was required to be discharged by the appellant after 10-5-2008. Despite such clear cut provision after 10-5-2008 appellant did not follow the same and fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to Rule 6(1) of Service Tax Rules, 1994 w.e.f. 10-5-2008 by adding an explanation, the service tax would become payable from 6th day of the month succeeding the month in which the amount payable by the appellant to GECAS, Ireland was debited in their books of account, as M/s. GECAS, Ireland are associated enterprises of the appellant. Accordingly for the period of delay in payment of service tax, interest on the service tax paid has been demanded under Section 75 of the Finance Act, 1994. 8. Under Section 67(1) of Finance Act, 1994 where the service tax is chargeable on any taxable service with reference to its value, then such value shall be, in a case where the provision of the service is for the consideration in money, the "gross amount charged" by the service provider for such service provided or to be provided. Explanation (c) to this Section defines the term "gross amount charged" and during period prior to 10-5-2008, the "gross amount charged" included payment by cheque, credit notes or debit notes. By amendment to this explanation w.e.f. 10-5-2008, the book adjustments and any amount credited or debited, as the case may be, to any amount whether called suspense accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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