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TMI Blog2023 (9) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... PANIES VERSUS UNION OF INDIA AND OTHERS [ 2010 (10) TMI 4 - SUPREME COURT] , the demand cannot sustain. The Commissioner (Appeals) has relied on the decision in the case of Association of Leasing and Financial Service Companies (supra) to hold that the demand at the enhanced rate cannot sustain - the view taken by the Commissioner (Appeals) agreed upon - the appeal filed by the Department is without merits. Appeal dismissed. - HON BLE MRS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) And HON BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) Smt. Reena O. M., Additional Commissioner for the Appellant Shri V. Ravindran, Advocate for the Respondent ORDER Order : [Per Hon ble Mrs. Sulekha Beevi C.S.] Brief facts of the case are that the appellant is registered under the category of works contract service, goods transport agency service and construction of commercial complex service. During the scrutiny of S.T.-3 returns filed by the assessee under works contract service for the period ending in March 2008, it was found that the assessee had paid Service Tax at the rate of 2.06% on the consideration received for the services provided prior to 01.03.2008. With ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... works contract services have been completed prior to 01.03.2008, the amount received after 01.03.2008 is not subject to levy at the enhanced rate of 4%. 6.2 The Ld. Counsel adverted to the Show Cause Notice and the Order-in-Original to assert the fact that the provision of service was completed prior to 01.03.2008 and that they have filed returns accordingly. 6.3 He prayed that the appeal may be dismissed. 7. Heard both sides. 8. The issue involved in the present case is whether the demand of Service Tax at the enhanced rate of 4% is sustainable or not when the services have been provided prior to 01.03.2008. The Department has relied on the Circular issued by the Board in F. No. 345/6/2007-TRU dated 28.04.2008. 9. The Hon ble High Court of Delhi in the case of Vistar Construction (P) Ltd (supra) has considered the very same Circular and on the issue as to whether differential amount of Service Tax at the enhanced rate is applicable when services have been completed prior to 01.03.2008. The Hon ble High Court observed that as per the decision of the Hon ble Supreme Court in the case of Association of Leasing and Financial Service Companies (supra), the demand cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. The date on which the services were agreed to be provided has no relevance to determine the applicable tax rate when the service is already taxable at the time of revision of rate. 4. In view of the above, it is clarified that the rate of 4% is applicable for the Works Contract Service where the payment for the service is received on or after 1-3-2008. 5. This issues with the approval of Member (B ST). Yours faithfully, Sd/- (Nishith Goyal) O.S.D. (TRU) Tel. : 23092374 Copy to : (i) Commissioner (Service Tax), CBEC, North Block, New Delhi (ii) Director General, Directorate General of Service Tax, 9th Floor, Piramal Chambers, Jijibhoy Lane, Lalbaug, Parel, Mumbai-400012 (iii) Commissioners of Service Tax, Ahmedabad/Bangalore/Chennai/ Delhi/Kolkata/Mumbai 7. On going through the said instruction and particularly para 3 thereof it appears that the view of the respondents is that service tax becomes chargeable on receipt of payment for the service whether or not the services are performed. This view is clearly wrong. We say so because the Supreme Court in the case of Association of Leasing Financial Service Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (231) E.L.T. 22 (S.C.), 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 statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law. 11. It is obvious that the said instruction being contrary to the law as declared by the Supreme Court can have no existence in the eye of the law. As a result we declare the instruction dated 28-4-2008 to be invalid. Consequently, the show cause noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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