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TMI Blog2019 (2) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... ax on consideration received in the nature other than money. After the final settlement, undisputedly there has been no service provided by the appellant to SHRIL. Though part payments might have been received, such payments including the immovable property is for the services provided (or settled) upto 1.3.2006. It is also to be mentioned that prior to 2011, the service tax has to be discharged on receipt basis and not accrual basis. Though balance payments in the nature of money was received after 1.3.2006, the appellant is liable to pay service tax on such amounts since even prior to 18.4.2006 the consideration in money is taxable. For the immovable property received after 1.3.2006, there can be no levy of service tax since the provision of service is complete on 1.3.2006. The Board vide Letter No. 334/4/2006-TRU dated 28.2.2006, in para 8(1)(f) has clarified that the amendment to Section 67 proposes to include consideration received not wholly in terms of money. The demand of service tax on the value of immovable property to the tune of ₹ 30,60,000/- with the penalties thereon cannot sustain and requires to be set aside - As the assessee is not contesting the dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellants entered into a resort operation and licence agreement dated 14.4.2005 with M/s. Sterling Holiday Resorts India Ltd. (SHRIL for short). As per the agreement, the appellant was entrusted with the responsibility of operating 11 resorts owned by SHRIL. For rendering such services, SHRIL was to pay various charges to the appellant. However, both the parties, that is the appellant herein and SHRIL reviewed the agreement and mutually agreed to terminate the above service agreement by Final Settlement Agreement dated 1.3.2006. As per the settlement agreement, it was agreed that balance of ₹ 3,29,81,431/- was payable after considering other amounts. Towards this balance, an immovable property to the value of ₹ 2.50 crores was adjusted. On the entire consideration that was agreed to be paid in nature of money by SHRIL as part of settlement, the appellant has fully discharged the service tax. The appellant is not therefore contesting the service tax of ₹ 33,53,890/- which is already paid. 2.2 The contest in the present appeal is with regard to the demand of service tax on ₹ 2.50 crores being the value of the property which was adjusted towards t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax relating to consideration in money and is contesting the demand of service tax only on the amount relating to the value of the property acquired by them towards the final settlement. She also submitted that the point of taxation rules have come into effect only in 2011 wherein the service tax is thereupon liable to be discharged on accrual basis instead of receipt basis. 3. In grounds para 33, 34 and 35, the appellants have contested the penalties imposed. It is submitted that the service tax of ₹ 33,53,890/- and interest of ₹ 2,93,093/- was paid on 27.3.2008 which is much before issuance of show cause notice which is dated 15.5.2008. She prayed to set aside the penalties. 4. The ld. AR Shri K. Veerabhadra Reddy supported the findings in the impugned order. He submitted that as per Section 67, the appellants are liable to pay service tax upon the monetary value of the immovable property received by them which is also consideration for final settlement of providing the service. The appellant has discharged service tax on amounts received by them in cash after 1.3.2006. The immovable property is consideration for services provided after 1.3.2006 and therefore t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... X as per the terms of the Resort Operation License Agreement and Full and Final agreement both dated 14.4.2005 upto the period ending 31.3.2006. This amount of ₹ 3,34,81,431/- (Rupees three crores thirty four lakhs eighty one thousand and four hundred and thirty one only) is mutually agreed upon and this will not be questioned by either parties of this agreement. 2. AUROMATRIX confirms and acknowledges that they have so far received a sum of ₹ 1,25,00,000/- (Rupees one crore twenty five lakhs only) against the amount payable as stated in clause 1 herein above leaving a balance of ₹ 2,09,81,431/- (Rupees two crores nine lakhs eighty one thousand four hundred and thirty one only). 3. Sterling agree to pay another sum of ₹ 1,20,00,000/- (Rupees one crore twenty lakhs only) towards royalty and management fee for the period 1.4.2006 to 31.3.2007. 4. Sterling have agreed to pay the balance of ₹ 3,29,81,431/- (Rupees three crores twenty nine lakhs eighty one thousand and four hundred and thirty one only) as per Annexure A in the following manner:- ANNEXURE A I Amount due as per agreement dated 14.4.2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar instruments but does not include currency that is held for its numismatic value. (c) gross amount charged includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment, and any amount credited or debited, as the case may be, to any account, whether called Suspense account or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise . 6.4 Later with effect from 18.4.2006, the said section underwent amendment which reads as under:- SECTION 67.Valuation of taxable services for charging service tax (1) Subject to the provisions of this Chapter, where service tax is chargeable on any taxable service with reference to its value, then such value shall, - (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A of the agreement does not indicate that the appellant has provided services from April 2006 to March 2007 or royalty fee was paid from April 2006 to March 2007. The periods mentioned in the said final settlement is only for the purpose quantification of the final settlement amount. The conclusion of the Commissioner that the amount settled by way of selling the immovable property is for the services provided for the period from 1.4.2006 to 31.3.2007 is incorrect. After the final settlement, undisputedly there has been no service provided by the appellant to SHRIL. Though part payments might have been received, such payments including the immovable property is for the services provided (or settled) upto 1.3.2006. It is also to be mentioned that prior to 2011, the service tax has to be discharged on receipt basis and not accrual basis. Though balance payments in the nature of money was received after 1.3.2006, the appellant is liable to pay service tax on such amounts since even prior to 18.4.2006 the consideration in money is taxable. For the immovable property received after 1.3.2006, there can be no levy of service tax since the provision of service is complete on 1.3.2006. At ..... X X X X Extracts X X X X X X X X Extracts X X X X
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