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M/s Intervalve (I) Ltd. Versus CCE, Pune-III

2015 (11) TMI 1187 - CESTAT MUMBAI

Relevant date for payment of service tax where services are provided to Associate Enterprises - accrual basis or receipt basis - Scope of ection 67(4) - Business Auxiliary Service - Receipt of commission - Held that:- the explanation regarding transaction of taxable service with an associate enterprises only refers to value of taxable service which shall include any amount credited or debited in the Books of Account. But the date on which payment of Service Tax is due to be made is the 5th/6th o .....

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sions of the Rules and the Act. The amount has not been credited to the appellant's account. Simple recording of invoice amount as receivable in the Books of Account does not mean that there is a book adjustment in every case. If Revenue's view is taken as correct, the provision of law which states that Service Tax payment is linked to the receipt of payment of service, would render Rule 6(1) meaningless. The view of lower authorities does not stand to reason and must be rejected. I hold that th .....

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nt provided Business Auxiliary Service to their associate enterprises M/s EL-O-Matic (India) Pvt. Ltd. The appellant paid Service Tax of ₹ 1,13,57,364/- on receipt of after the receipt the commission amount for providing the services. 2.1 The issue in the present case is what is the relevant date prescribed for payment of Service Tax when service is provided to an associate enterprise. The Order-in-Appeal refers to Section 67(4) of the Finance Act which deals with valuation of services. It .....

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erprise. Similarly, an explanation was added under third proviso to Rule 6(1) of the STR by Notification No. 19/2008-ST dated 10.05.2008, which reads as under:- For Removal of doubts, it is hereby declared that where the transaction of taxable service is with any associate enterprises, 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 th .....

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the Books of Account but paid it after receiving the payment on issue of the invoices. Accordingly, there was delay in the payment and interest of ₹ 3,91,054/- was ordered to be paid under Section 75 and penalty of ₹ 10,000/- was also imposed. Commissioner (Appeals) upheld the order of the adjudicating authority. 3. Heard both sides. 4. The learned advocate appearing for the appellant stated that proper bills were raised on the associate enterprises, the money was received through b .....

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d in the Books of Account of the service provider. 5. The learned A.R. reiterates the findings of the Commissioner (Appeals). 6. I have carefully gone through the facts of the case. It appears that the implication of amendment to Section 67(4) of the Act and the inclusion of explanation under Rule 6(1) has been misread by the lower authorities. Section 67(4) merely clarifies that, apart from the amount charged by raising invoices, if any other amount is charged to the service receiver and adjust .....

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