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TMI Blog2010 (11) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... the, introduction of Finance Bill 2008, they had been remitting service tax on associated enterprise transactions on collection basis and subsequent thereto, they had been remitting the service tax on associated enterprise transactions on raising service invoice. They had raised three invoices towards providing services of infrastructure, manpower and bandwidth charges to M/s. Sify Communications Ltd. for the quarter ending 31-3-2008 on the same date and three more invoices for the quarter ending 30-6-08 on the same date. On 5-9-2008, they had remitted Rs. 5,78,10,547/- towards service tax on account of associated enterprise transactions vide two challans dt. 5-9-08 under 'Leased Circuit Services' category based on the service invoices issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore the assessee was required to pay interest @ 13% per annum for 158 days on Rs. 2,69,24,788/- being the total service tax payable on 31-3-08 and interest for 62 days on Rs. 3,08,85,760/- being the total service tax payable on 5-7-08. Accordingly, the total interest payable worked out to Rs. 21,97,191/- instead of Rs. 24,19,302/- wrongly paid and it appeared therefore that the assessees were eligible only for refund of Rs. 2,22,111/- and not Rs. 8,44,029/- as claimed by them. 2. Show-cause notice proposing rejection of refund of Rs. 6,21,918/- (difference between the amount claimed and the amount actually eligible); the Asst. Commissioner adjudicated the notice by rejecting the claim for refund of Rs. 6,21,918/- and order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or after provision of such service. (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed. Explanation. - For the purposes of this section, - (a) "consideration" includes any amount that is payable for the taxable services provided or to be provided; (b) "money" includes any currency, cheque, promissory note, letter of credit, draft, pay order, travellers cheque, money order, postal remittance and other similar instruments but does not include currency that is held for its numismatic value; (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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of non-receipt of payment eventhough the transaction has been recognized as revenue/expenditure in the statement of profit and loss account for the purpose of determining corporate tax liability. 6.3 As an anti-avoidance measure, it is proposed to clarify that service tax is leviable on taxable services provided by the person liable to pay service tax even if the amount is not actually received, but the amount is credited or debited in the books of account of the service provider. In other words, service tax is required to be paid after receipt of payment or crediting/debiting of the amount I the books of accounts, whichever is earlier. However, this provision is restricted to transaction between associated enterprises. This provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice is with any associated enterprise, any payment received towards the value of taxable service, in such case shall include 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". 6. The statutory provision for demanding service tax in respect of transactions between associated enterprises, immediately upon amendment, has been introduced only w.e.f. 10-5-08. Prior to 10-5-08, neither the Finance Act, 1994 nor the Service Tax Rules, 1994 contain any provision enabling demand of service tax prior to the realization of taxable services, in any circumstances. This being so, it is not legally permissible to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) E.L.T. 846] relied upon by the lower appellate authority to conclude that the amendment, which is clarificatory in nature, is retrospective, is not applicable in the facts of the present case, as the Tribunal held in that case that clarificatory amendments are retrospective only when they did not materially change, the existing provisions, while in the instant case, there was no provision either in Section 67 of the Finance Act or Rule 6 of the Service Tax Rules to suggest that in the case of transactions between associated enterprises, service tax has to be paid immediately on entry of the transaction in the books of account. 7. In the light of above discussion, I agree with the contention of the assessees that there was no delay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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