9911796707
TMI Blog2024 (9) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... ability in the impugned order that amendment of Rule 6 ibid will have retrospective effect defeats the legislative intent and also against the principles of legal jurisprudence. It is also noted that payment of service tax in respect of transactions between associated enterprises on the basis of book entry was introduced only w.e.f. 10.05.2008 by incorporating the Explanation clauses in both Section 67 of the Finance Act, 1994 and Rule 6 ibid. The service tax statute holding the field at the relevant point of time did not contain any provision for demand of service tax by the authorities, prior to realization of the value of taxable services - N/N. 19/2008 introducing Explanation to Rule 6 ibid, nowhere specifies that the same will have retrospective application to deal with the past transactions. The 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. There are no merits in the impugned order, and thus, the same is set aside - appeal allowed. - DR. RACHNA GUPTA, MEMBER (JUDICIAL) AND MS. HEMAMBIKA R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the present appeal. 3. Learned Counsel for the appellant submitted that service tax is generally required to be deposited on actual receipt of consideration for services provided or to be provided. For import of services, Service tax is required to be deposited on payment made for such services. However, on 10 May 2008, i.e, Rule 6 of Service Tax Rules, 1994 was amended and an explanation regarding import of service from Associated Enterprises was added vide Notification No 19/2008 dated 10 May 2008. Prior to the said amendment, the law was clear that Service tax had to be paid only when payment for services was made and not on passing the entry in the book of accounts. 3.1 The Learned Counsel submitted that it is a well settled principle that the law as applicable at the time of rendering of the service has to be applied. In the present case, the law which was applicable at the time of receipt of service by the Company was that Service tax needs to be deposited only when payment for such services was made. Further, the explanation added on 10 May 2008 does not specify that any amount already accrued and appearing in the books of account as on 10 May 2008 needs to be deposite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was decided by the management of the Appellant to pay-off the Service tax on the said balance. Since the amount so paid under reverse charge was immediately available as Cenvat credit to the Appellant, the Service tax was suo motu paid to avoid any litigation with the Department on the matter. Therefore, considering the revenue neutral situation for the appellant and to avoid any litigation, the appellant started paying service tax on the same from March 2011. Therefore, since the appellant has paid the service tax before it has become due, no interest is payable on the same. 3.5 Ld. Counsel further submitted that no penalty is leviable if entire duty and interest is paid prior to issue of show cause notice. He contended that sub-section 3 of Section 73 of the Act along with Explanation of the said sub-section as applicable puts a bar on the authorities to impose penalty where the entire amount of duty and interest is paid prior to issuance of Show Cause Notice. He prayed that the appeal may be allowed. 4. Learned Authorized Representative for the Department submitted that there is no dispute that the appellant received services from their associate enterprises located outside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch case shall 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. The effect of above amendment of Rule 6 ibid was that service tax would now be required to be paid by the person liable to pay service tax on the taxable services provided to associated enterprises, even where the consideration for the taxable services provided, is not actually received. In such cases, service tax is required to be paid immediately upon crediting/debiting of the amount in the books of accounts or receipt of payment, whichever event occurs earlier. 8. In the instant case, the period of dispute is for the tax pending on such outstanding amounts as reflected in their Books of accounts, immediately after the amendment. Undoubtedly, these were for services received during the period prior to the said amendment, as the payment had not been received. Since, the liability for payment of service tax arises upon receipt of payment towards taxable services, which has admittedly not been received by the appellant, there was no scope or occasion to discharge the service tax liability in terms of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0th May 2008. As per Rule 6, it is the date when the amount is credited/debited that is relevant and not the fact that the amount remains 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. 10. Thus, confirmation of service tax and interest liability in the impugned order that amendment of Rule 6 ibid will have retrospective effect, in our view, defeats the legislative intent and also against the principles of legal jurisprudence. We also note that payment of service tax in respect of transactions between associated enterprises on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
