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2013 (2) TMI 55 - HC - Service TaxRate of Service Tax on Chartered Accountant and other services - Determination of rate of Service tax where services were provided before 1.4.2012 and payment is received on or after 1.4.2012 – Increase in rate of service tax w.e.f. 1.4.2012 from 10% to 12%. – Circular no. 154 and 158 states that rate of service tax will be 12% - Amendment to Point of Taxation Rules, 2011 - Constitutional validity. New Rule 7 with effect from 01.04.2012 does not provide for the determination of point of taxation in respect of services rendered by chartered accountants. Both the circulars which are impugned in the present writ petition proceed on the erroneous basis that Rule 7 inserted w.e.f. 01.04.2012 covers the services rendered by chartered accountants. Circular No.154 when it states that invoices issued on or before 31.3.2012 shall continue to be governed by Rule 7 as it stood before 01.04.2012 is erroneous because on and from 01.04.2012, the old Rule 7 was no longer in existence, having been replaced by new Rule 7. Circular No.158, insofar as it states that in the case of the eight specified services (which includes the services of chartered accountants), if the payment is received or made, as the case may be, on or after 01.04.2012, the service tax needs to be paid at 12% is again without any statutory basis. The new Rule 7 does not cover the services which were earlier referred to in Clause (c) of Rule 7 (including services of chartered accountants) as it existed up to 31.3.2012. The circular seems to have overlooked this crucial aspect. In the present case rule 4 is applicable - where the services of the chartered accountants were actually rendered before 01.04.2012 and the invoices were also issued before that date, but the payment was received after the said date, the rate of tax will be 10% and not 12%. The circulars have to be in conformity with the Act and the Rules and if they are not, they cannot be allowed to govern the controversy. – Thus circulars are quashed as being contrary to the Finance Act, 1994 and the Point of Taxation Rules, 2011 as Circular which is contrary to the Act and the Rules cannot be enforced [Commissioner of Central Excise, Bolpur vs Ratan Melting & Wire Industries - 2008 (10) TMI 5 - SUPREME COURT OF INDIA] – Decided in favor of assessee.
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