TMI Blog2015 (10) TMI 2228X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of assessee - Disallowance of credit on medical insurance services cannot be sustained – Decsion made in case of Commissioner of Service Tax, Bangalore Vs. M/s Team Lease Services (P) Ltd. [2014 (4) TMI 948 - KARNATAKA HIGH COURT] followed. Transactions with associated enterprises - Held that:- 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 not 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 give retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was liable to pay service tax under Section 66A of Finance Act, 1994. During the Financial Year 2006-2007 and 2007-08, the appellant received services from it s overseas affiliate and made entries in the books of account. Service tax pertaining to these book entries was paid by appellant in January 2009. Department entertained the view that as per amendment brought forth by the Explanation to gross amount charged w.e.f. 10.5.2008, the appellant is liable to pay service tax on the due date reckoned as per date of making the book adjustments and that when service tax was paid by appellant in 2009 pertaining to book entries made in 2006-07, 2007-08, there is delay in payment of service tax and therefore appellant is liable to pay interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd. 2014-TIOL-510-HC-KAR-ST. 4. The credit is seen denied in the impugned order observing that medical insurance service has no direct nexus with the output services. In a catena of decisions it has been held that, the definition of input service, as it stood during the relevant period (prior to 1.4.2011) covered every conceivable service used in the business of the assessee. The judgment of the Hon'ble High Court of Karnataka relied by the appellant in the case cited supra covers the issue, the facts being identical. Following the dictum laid in the said judgment I am of the view that the disallowance of credit on medical insurance services cannot be sustained. 5. The next issue to be addressed is with regard to the demand o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation inserted in Rule 6(1) of Service Tax Rules is as below: Explanation For the removal or doubts, it is hereby declared that where the transaction of taxable service 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 learned counsel for appellant submitted that appellant has paid interest upon the delayed payment after 10.5.2008 upto the date of payment. The appellant disputes the claim of interest prior to 10.5.2008 only. According to the appellant, they have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p firm, they become liable to pay the service tax on 05.06.2008 i.e. by 5th of the calendar month immediately following the calendar month in which the payment are made towards the value of taxable services. The assessee s contention that the department is applying the provisions with retrospective effect is, therefore, not tenable. 7. According to the department, liability to pay service tax arises as soon as service is rendered although the service tax is required to be paid at the time of receipt /making of payment of consideration or as advances, before rendering of services. Section 68 of the Finance Act read with Rule 6 of the Service Tax Rules provide for the manner of payment. The gross value has to be determined in terms of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for plugging avoidance of tax on the ground of non-realization of money from associated enterprises and the intention of the Legislature in bringing the amendments is to introduce a new provision and not to remove any doubts in the existing provision. It is not, nor can it be, anybody s case, that Explanation shall always take effect retrospectively. In the case of Commissioner of Customs Vs. Skycell Communications Ltd. (2008-TIOL-1898-CESTAT-MAD-LB), [2008 (232) ELT 434], the Larger Bench of the Tribunal has held that Explanation placing restrictions prejudicial to the assessee will not be retrospective In the instant case also, Notification No. 19/08 introducing Explanation to Rule 6 of the Service Tax Rules, 1994 contains a provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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