9911796707
TMI Blog2024 (9) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant avails the services of its group entities situated outside India, which is accounted by the appellant vide a debit entry in the books of account, as and when such services are received. At the end of the Financial Year, the credit balances are carried forward to the next year. As per Section 66A of the Finance Act, 1994 read with Rule 6 of Rules (as it stood prior to 10 May 2008), service tax was required to be paid on import of services on payment made for such services. Accordingly, tax was being deposited as and when the payments for services received were being made, up till 10 May 2008. However, on 10 May 2008, i.e. Rule 6 of Service Tax Rules, 1994 was amended and an explanation regarding transactions between associated enterprises was added vide Notification No 19/2008 dated 10 May 2008. The department was of the view that from the combined reading of Explanation (c) to Section 67 of the Act ibid and Rule 6(1) of the Rules, the appellant being a person, other than individual or property firm, was liable to pay service tax by 5th of the month immediately. Accordingly, a show cause notice dated 27.02.2012 was issued to the appellant demanding service tax amounting to Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature. In this context, ld. Counsel relied upon the following decisions:- * Sify Technologies Ltd vs Commissioner of Central Excise & Service tax reported in 2010-VIL-17- CESTAT-CHE * CCE. vs Himachal Aluminum Pvt. Ltd. reported in 2009 (236) E.LT. 47 (H.P.) * CC. vs. Skycell Communications Ltd. reported in 2008 (232) E.L.T. 434 (Tri. - LB) 3.3 Learned Counsel further mentioned that the deeming provision sought to be introduced by inserting the Explanation had the effect of changing a substantive law, and therefore, should only have prospective effect. In this regard, he submitted that the Courts have time and again held that in case any Explanation is inserted which amends a substantive law; such explanation ought to have a prospective effect unless otherwise specified. In support, he relied upon the following decisions:- * Khetu Ram Bishembar Dass vs. CCE reported in 1991 (52) E.L.T. 110 (Tribunal) * Union of India vs. Martin Lottery Agency, reported in 2009 (14) S.T.R. 593 (S.C.), 3.4 Learned Counsel also contended that it has always believed that service tax is not payable on the balance outstanding in the books as on 10 May 2008 in respect of the transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on 10.05.2008 towards services received by them from their overseas associate enterprises to the department nor had they paid Service Tax thereon till the Department raised objection in this regard. Moreover, they did not reflect correct value of services received by them and Service Tax payable by them in the ST-3 returns filed by them during the relevant period. Thus the appellant have willfully suppressed the facts from the Department and contravened the provisions of Finance Act, 1994 and Service Tax Rules, 1994 with intent to evade payment of Service Tax. Consequently, the extended period under proviso to Section 7(1) of the Finance Act, 1994 has been correctly invoked for confirming demand and interest thereon. 5. The short question involved in this appeal for consideration is, as to whether, the amendment in Rule 6 ibid is retrospective or prospective and whether it would apply to the outstanding balance available as on 10.05.2008 or only prospective in respect of entries made in the books of accounts post 10.05.2008. 6. We note that as per Rule 6(1) ibid, as existed prior to 10.05.2008, service tax was required to be paid by the 5th/ 6th day of month immediately follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 was found to be vague or ambiguous by the executive. In fact, the Board circular shows that invocation of clause (ii) had never been in contemplation of the taxing authorities." xxx xxx xxx 52. As stated hereinbefore, for the aforementioned purpose, the expressions like "for the removal of doubts" are not conclusive. The said expressions appear to have been used under assumption that organizing games of chance would be rendition of service. We are herein not concerned as to whether it was constitutionally permissible for the Parliament to do so as we are not called upon to determine the said question but for our purpose, it would be suffice to hold that the explanation is not clarificatory or declaratory in nature." 12. In the present case, the Court finds that although the intention behind the insertion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the said amendment will be considered as prospective. We further note that Notification No. 19/2008 introducing Explanation to Rule 6 ibid, nowhere specifies that the same will have retrospective application to deal with the past transactions. Thus, such Explanation placing restrictions prejudicial to the interest of the associated enterprises would not apply retrospectively. The decisions cited by the ld. Advocate for the appellant squarely apply to the facts of this case, wherein it has been held that inclusion of the explanation clause on 10.05.2008 in Rule 6 ibid would apply prospectively for payment of service tax on the basis of entries made in the books of accounts. 11. In view of the above discussions and analysis, we are of the view that service tax demand cannot be confirmed on the service fee not realized during the disputed period from the associate enterprise, even if the same has been reflected in the books of accounts of the appellant as the amount outstanding. 12. Accordingly, we do not find any merits in the impugned order, and thus, the same is set aside and the appeal is allowed in favour of the appellant. (Order pronounced in the open Court on 11.09.2024)< ..... X X X X Extracts X X X X X X X X Extracts X X X X
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