TMI Blog2011 (4) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 - Ms Archana Wadhwa, Mr.Mathew John, JJ. Appeared for the Appellant: Shri J.K.Mittal, Advocate Appeared for the Respondent: Shri Amrish Jain, DR ORDER Per Mathew John: The Appellant is engaged in the business of manufacturing and repairing Hydraulic Service Trolley (HST). The Appellant was registered under service tax laws as a provider of service under the category Maintenance and Repair . 2. M/s HAL Bangalore had entered into a contract for maintenance and repair of HST owned by the Indian Air Force. They had sub-contracted this activity to the Appellant. 3. For the period 29-09-04 to 03-03-2005, the Appellant received Rs. 72,17,994/- from HAL for maintenance and repair done by the Appellant. The Appellant did not pay service tax on the said amount under the belief that sub-contractors do not have to pay service tax as per clarifications given by CBEC in a booklet published as Frequently Asked Questions and Answers . The Appellant had intimated this stand to the department vide their letter dated 04-11-2004 along with the bill numbers under which the said amount was received. The Appellant did not include the amount in the ST-3 return filed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from 25-04-2004, that is the date on which ST-3 return for March 2004 was to be filed. 8. The argument of the department is that the earliest payment under the impugned bills was received on 25-01-2005. The Appellant should have paid service tax on this amount before 05-02-2005 and should have included in row 1 of item 4A of ST-3 return for Amount received for taxable service(s) provided in their ST-3 return for March 2005 to be filed before 25-04-2005. Since SCN was issued on 24-04-2006 it is contested that the notice is issued within one year from the relevant date. 9. Provisions made under section 73 of the Finance Act 1994 are relevant for deciding this dispute. The provisions are reproduced below: 73. Recovery of Service tax not levied or paid or short levied or short paid or erroneously refunded (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue contests that it should be with reference to the latter event, that is realization. Section 73 of Finance Act 1994 is not very specific about this issue. So a meaning has to be given by reading all the provisions and giving a harmonious interpretation. Under the scheme of levy of service tax, as provided in Rule 6 of Service Tax Rules 1994, tax is be paid when the value is realized and not when value is billed. Therefore short payment occurs when value is realised but tax not paid. The theme of section 73 of the Act is short payment. So the relevant date has to be interpreted in the context of short payment. So the relevant date has to be counted from the date of ST-3 return in which short payment occurs and not with reference to the date on which information is furnished regarding billing. 12. It may be appropriate to see the consequence of the interpretation canvassed by the Appellant. If an assesse raises bills for Rs. 1,00,000/- in March 2004 and reports the same in the in ST-3 return for March in row 3 of item 4(A) of ST-3 and does not receive the billed amount till March 2005, no notice under section 73 can be issued because no short payment has occurred. In May 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciple that sub-contractors are not liable to pay tax, with no condition attached, has been produced. (ii) There was another issue that the definition of the service concerned could not cover the activity carried by some of the sub-contractors and therefore in some cases clarifications were issued to the effect that the person who bills for the complete service which will fall with the service as defined will only be taxable. (iii) There was also the issue that in initial stages services were not defined as a specified service provided to any person by any other person as is the case for most of the entries in section 65(105) of the Finance Act,1994 as it stands today. Earlier the nature of the person providing service as well as the nature of the person availing service was specified in many of the taxable entries. For example if service provided to a customer by a telegraphic authority was taxed, the service provided by one telegraphic authority to another telegraphic authority for the former to render service to the customer was not under the tax net. Such issues came up also in the case of service provided to a client by a consulting engineer. The subcontractor who was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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