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TMI Blog2024 (10) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... which the manner of determination of the taxable value can be questioned. As the value of taxable service has been determined on the basis of Section 67 of the Finance Act, 1994 there are no merits in enhancement of the value of the taxable service in manner as suggested by the impugned order. It is the submission of the appellant that where so ever any additional incentive was paid to the service provider the same was added while determining the value of taxable service. However in case of penalties deducted from the invoice value the taxable value is determined on the basis of the gross amount paid towards the provision of service. We do not find that Rule 6 (1) (x) provides for enhancement of the value of the taxable service in such cases. Said Rule will have no applicability to the present case. In any case Rule 6 (1) (x) cannot be read to be over-riding the provisions of Section 67 of the Finance Act, 1994. In case of Intercontinental Consultants and Technocrats Pvt. Ltd. [ 2018 (3) TMI 357 - SUPREME COURT] Hon ble Supreme Court observed ' High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1994, for the act of willful suppression 2.4 The show cause notice was adjudicated as per the order in original referred in para 1 above, holding as follows: ORDER (i) I, hereby confirm the demand of Rs.2,77,682/-, upon the party M/s M. P. Biscuits Private Limited, B-18, Industrial Area Road, Patanava, Basant Nagar, Varanasi under the provisions of Section 73(2) of the Finance Act, 1994, as amended along-with due interest under Section 75 of the Act, ibid. (ii) I also impose a penalty of Rs.2,77,682/- upon the party under the provisions of Section 78 of the Act. However, the party has the option to pay 25% of the penalty payable, provided they pay the service tax, interest and penalties imposed, within a period of 30 days of receipt of this order. All the amounts may be paid forthwith. 2.5 Aggrieved appellant filed the appeal before the Commissioner (Appeal), which has been disposed off as per the impugned order. 2.6 Aggrieved appellant has filed this appeal. 3.1 We have heard Shri Mahir Chablani, Advocate for the appellant and Shri Manish Raj, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsel submit that: There are certain computational ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freight, Thus, there was no short payment of Service Tax, on their part; and (iii) The Adjudicating Authority, without verifying disputing the submission of the appellant that short payment of Service Tax was on account of deduction of penalty from the freight, confirmed the demand of Service Tax, after relying on Section 67 of the Act and Rule 6(3) of the Service Tax Rules, 1994. 4.2 I find that Rule 6(3) of the Service Tax Rules, 1994 was substituted, w.e.f 01.04.2011 (i.e., after introduction of the Point of Taxation Rules, 2011, w.e.f 01.04.2011, the point of taxation of service in normal cases, was the earlier of the two events, i.e., the time of issue of invoice and the time of receiving the payment), and provided, as under: Rule _6(3): Where an assessee has issued an invoice, or received any payment, against a service to be provided which is not so provided by him either wholly or partially for any reason, or where the amount of invoice is renegotiated due to deficient provision of service, or any terms contained in a contract the assessee may take the credit of such excess service tax paid by him, if the assessee (a) has refunded the payment or part thereof, so received for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough the appellant have relied upon a number of case laws in their appeal, they have not given any justification as to how these decisions are applicable to the facts of their case, especially when circumstances, transactions, events of each case, are required to be considered, analyzed and weighed against the circumstances et al to be the same in the referred cases. I also find that the Hon'ble Supreme Court in the case of Punjab National Bank vs. R.L. Vaid 2004 (172) E.L.T. 24 (S.C.), has held at Para 5, as under: 5. We find that the High Court has merely referred to the decision in R.K. Jain's case (supra) without even indicating as to applicability of the said decision and as to how it has any relevance to the facts of the case. It would have been proper for the High Court to indicate the reasons and also to spell out clearly as to the applicability of the decision to the facts of the case, There is always peril in treating the words of a judgment as though they are words in a Legislative enactment and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case. Circumstantial flexibility, one additional or different fact m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such manner as may be prescribed. Explanation . For the purposes of this section, (a) consideration includes (i) any amount that is payable for the taxable services provided or to be provided; (ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed; (iii) any amount retained by the lottery distributor or selling agent from gross sale amount of lottery ticket in addition to the fee or commission, if any, or, as the case may be, the discount received, that is to say, the difference in the face value of lottery ticket and the price at which the distributor or selling agent gets such ticket. (b) [ * * * * ] (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 servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lost in transit and the value of the consignment shall be recovered from you 46. In the event of delay in unloading the truck beyond one day from date of arrival at Parle's desired destination, Carrier will charge Rs 300/- per day (9 tons) Rs 500/- per day (10 tyre/24 ft container), from Company as detention charges. In case delay is extended beyond 1 day from the date of arrival of truck (9 tons) at consignors destination, Carrier will charge Rs 500/- and for 10 tyre/24ft container @ Rs 700/- per day, For 28 Ft and 32 Ft Container Carrier will charge Rs 700/- per day and in case delay is extended beyond 1 day , Carrier will charge Rs 900/- from 2 day onwards only to the company Iln case trucks reaches the destination , after 5 pm on the said date, it will be unloaded on next day for which no detention charges will be paid or if vehicle reports after 5 pm and next day is a holiday or reports on any holiday , the vehicle shall deemed to have reported on the next working day and hence will not qualify for detention charges during the holiday 47 No Detention charges will be paid to Carrier., if vehicle reaches the destination after the prescribed transit days 48 Carrier agrees no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement. 4.7 From the perusal of the above terms of the agreement it is evident that the consideration for the provision of the said service is not the invoice value but is amount determined by the service recipient in terms of the above agreement. In terms of this agreement for efficient provision of service the service provider is rewarded and for the deficiencies he is subjected to certain penalties which are deducted from the invoice value. Appellant takes the value of taxable service as equivalent to the actual amount paid to the service recipient after adjusting for the rewards and penalties, a fact not in dispute. We do not find anything in section 67 as per which the manner of determination of the taxable value can be questioned. As the value of taxable service has been determined on the basis of Section 67 of the Finance Act, 1994 we do not find any merits in enhancement of the value of the taxable service in manner as suggested by the impugned order. 4.8 Impugned order refers to Rule 6 (1) (x) of the Valuation Rules 2006 which was inserted with effect from 01.07.2012. The said rule is reproduced in the para 4.3 of the impugned order. As per the said rule any amounts recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the service tax will be @ 12% of the value of taxable services . Thus, service tax is reference to the value of service. As a necessary corollary, it is the value of the services which are actually rendered, the value whereof is to be ascertained for the purpose of calculating the service tax payable thereupon. 24 . In this hue, the expression such occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing such taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service cannot a part of that valuation as that amount is not calculated for providing such taxable service . That according to us is the plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 1, 2006) or after its amendment, with effect from, May 1, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67. We, therefore, find that High Court was right in interpreting Sections 66 and 67 to say that i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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