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2016 (12) TMI 1469 - AT - Service TaxManagement or Business Consultant's services - associated enterprises - Rule 6 of the Service Tax Rules, 1994 - 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? Held that: - The effect of amendment of Rule 6 ibid is that service tax would 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. By incorporating the explanation in Rule 6 ibid, the restriction was imposed for the first time that in case of transaction between associated enterprises, service tax has to be paid immediately on entry of the transaction in the books of account, the said amendment will be considered as prospective in effect, otherwise the doctrine of 'fairness' would be defeated. Further, Notification No. 19/2008 introducing Explanation to Rule 6 ibid, no where specifies that the same will have retrospective application to deal with the past transactions. Appeal allowed - tax demand not sustainable - decided in favor of appellant.
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