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2013 (12) TMI 42 - AT - Service TaxApplicable rate of service tax - Whether rate of service tax applicable at the time of rendering of service or at the time of receipt of payment - Taxable event - Held that:- As per section 66 of the Finance Act, 1994, service tax shall be levied at the rate of 12% of the value of the taxable service. Section 67 pertains to valuation of taxable services for charging service tax. As per rule 6(1) of Service Tax Rules, 1994, service tax is required to be paid by the 5th of the month immediately following the calendar month in which the payments are received towards the value of taxable services. Service tax shall, therefore, become chargeable on receipt of payment and on the amount so received for the service provided or to be provided, whether or not services are performed. The rate applicable to a taxable transaction shall be the rate in force at the time the service tax becomes chargeable. This is a well settled legal position. 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. Taxable events in the present writ petition had admittedly occurred prior to 01.03.2008. At that point of time the rate of service tax applicable in respect of the services in question was 2% and not 4%, which came into effect only on or after 01.03.2008. In both the writ petitions the date of receipt of payments was subsequent to 01.03.2008 but that would not make any difference because it is not receipt of payment which is the taxable event but the rendition of service - The only thing that happened after May 14, 2003 was that the payments were received after that date. That, in our view would not change the date on which the taxable event had taken place. Since, the taxable event in the present case took place prior to May 14, 2003, the rate of tax applicable prior to that date would be the one that would apply. In the present case, the rate of five per cent would be applicable and not the rate of eight per cent - Decided against Revenue.
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