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2018 (4) TMI 613 - HC - Service TaxLiability of service tax - Point of Taxation - continuous supply of services - invoices are not raised - assessment based on Profit and Loss account - business of promotion and construction of residential apartments and complexes - projects are undertaken on a joint venture basis, the petitioner being the builder, along with land owners - case of petitioner is that the customers have remitted, in advance, the consideration relating to several of the initial landmarks as a lump-sum and that the said amount has been offered to tax and it is incumbent upon the respondent to check whether the receipts offered to tax correspond and cover the stages in respect of which consideration has accrued as per the agreement with the customer. Held that: - AS 7 deals with the recognition of income from building projects on the basis of the Project Completion Method' - The emphasis and thrust of each methodology is in alignment with the different purposes that they bear reference to AS 7, in the context of the preparation of financials, addresses the how much of the transaction over the term of contract whereas Rule 3 of the Rules addresses the when in relation to the rendition of service for computing taxability under the Finance Tax Act 1994. The foundation of the assessment is flawed. Rule 3(a) provides for a situation where the accrual of service is predicated upon the raising of an invoice. In the present case, the admitted position is that the petitioner does not raise invoices as and when a particular landmark is reached and the accrual of the consideration stage-wise is occasioned automatically upon completion of the stage of construction set out in the agreement itself - It is a well settled position that when a statutory provision or Rule addresses a specific scenario, such rule/provision is liable to be interpreted on its own strength and context and one need look no further to alternate sources to seek clarity in regard to the issue that has been addressed by the aforesaid rule/provision. Insofar as Rule 3 sets out a specific modus operandi in this regard, it assumes priority and is the only relevant factor to be taken into account in the determination of point of rendition and accrual of services for the purpose of imposition of service tax. The matter remitted to the file of the Respondent to be re-done de novo strictly in accordance with the provisions of Rule 3 of the Rules - petition allowed by way of remand.
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