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TMI Blog2017 (10) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the explanation to Rule 6 being prejudicial to the interest of the AE would, therefore, not apply retrospectively. Held that: - As a consequence of the above amendments, service tax was required to be paid on taxable service provided to AEs even where the consideration of such tax and services had not actually been received but had been shown in books of accounts as “outstanding”. Although the intention behind the insertion of the above Explanation to Rule 6 of ST Rules corresponding to the amended Explanation (c) to Section 67 of the FA was to bring amounts receivable from the AEs of the Assessees to tax, the intention was not to make it retrospective, i.e. to tax the transactions that have taken place prior to 10th May 2008. Adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Finance Act ( FA ), 1994 against an order dated 16th December 2016 passed by the Customs, Excise Service Tax Appellate Tribunal ( CESTAT ) in Appeal No. ST/60163/2013 whereby the appeal of the Respondent-Assessee was allowed and the order in appeal dated 25th July, 2013 of the Commissioner (Appeals) was set aside. 4. The Respondent-Assessee is a subsidiary of McDonald s Corporation, USA ( the holding Company ) which also happens to be its Associated Enterprise ( AE ). During the Financial Years ( FY ) 2006-07 and 2007-08, the Assessee provided management services or business consultancy services to its AE for undertaking franchise business in India. The Assessee was registered with the Service Tax Department under the taxable c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall include, any amount credited or debited, whether called 'suspense account or by any other name, in the books of account of a person liable to pay service tax. 7. As a consequence of the above amendments, service tax was required to be paid on taxable service provided to AEs even where the consideration of such tax and services had not actually been received but had been shown in books of accounts as outstanding . 8. The question that arises in the present case is whether the amount shown as outstanding in the books of accounts of the Assessee as on 10th May 2008 would be amenable to service tax by virtue of the above amendments. According to the Service Tax Department, the question had to be answered in the affirmative a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax. 11. The Court finds that a similarly worded explanation to Section 65 (19) of the FA 1994, in the context of service tax payable on rendering service of promotion and marketing of lottery tickets, was held by the Supreme Court in Union of India v. Martin Lottery Agencies Limited (2009) 12 SCC 209 to be not merely clarificatory. The following observations of the Court in paras 34 and 52 of the said decision are relevant in this context: 34. No doubt, the explanation begins with the words for removal of doubts . Does it mean that it is conclusive in nature? In law, it is not. It is not a case where by reason of a judgment of a court, the law was found to be vague or ambiguous. There is also nothing to show that it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the books. Any contrary interpretation would result in the provision being made retrospective, which was not the intention. 13. In that view of the matter and particularly, in view of the settled legal position explained by the Supreme Court in Martin Lottery Agencies Ltd. (supra), the Court is satisfied that no error has been committed by the CESTAT in answering the issue in favour of the Assessee, viz., that the aforementioned amendments to the FA 1994 as well as the ST Rules cannot be made retrospective. Consequently, no substantial question of law arises for consideration. 14. The appeal as well as the pending application is dismissed but, in the circumstances, without any order as to costs. - - TaxTMI - TMITax - Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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