TMI Blog2016 (12) TMI 1469X X X X Extracts X X X X X X X X Extracts X X X X ..... services provided, is not actually received. In such cases, service tax is required to be paid immediately upon crediting/debiting of the amount in the books of accounts or receipt of payment, whichever event occurs earlier. By incorporating the explanation in Rule 6 ibid, the restriction was imposed for the first time that in case of transaction between associated enterprises, service tax has to be paid immediately on entry of the transaction in the books of account, the said amendment will be considered as prospective in effect, otherwise the doctrine of 'fairness' would be defeated. Further, Notification No. 19/2008 introducing Explanation to Rule 6 ibid, no where specifies that the same will have retrospective application to deal wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Tax Rules, 1994, the Department initiated show cause proceedings and adjudicated the matter, in confirming the demand of service tax of ₹ 40,37,858/- along with interest. Besides, penalties under different provisions of the Finance Act, 1994 were imposed on the appellant. In appeal, the ld. Commissioner (Appeals) vide the impugned order dated 25.07.2013 has upheld the adjudged demand. Hence, the present appeal is before this Tribunal. 2. The ld. Advocate appearing for the appellant submits that on receipt of payment towards service fee from the holding company, the appellant paid the service tax within the stipulated time prescribed in Rule 6 ibid. He further summits that the explanation inserted in Rule 6 ibid on 10.05.2008 wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red that where the transaction of taxable service is with any associate enterprise, any payment received towards the value of taxable service, in such case shall include any amount credited or debited, whether called 'suspense account' or by any other name, in the books of account of a person liable to pay service tax. 7. The effect of above amendment of Rule 6 ibid is that service tax would be required to be paid by the person liable to pay service tax on the taxable services provided to associated enterprises, even where the consideration for the taxable services provided, is not actually received. In such cases, service tax is required to be paid immediately upon crediting/debiting of the amount in the books of accounts or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced only w.e.f. 10.05.2008 by incorporating the explanation clauses in both Section 67 of the Finance Act, 1994 and Rule 6 ibid. The service tax statute holding the field at the relevant point of time does not contain any provision for demand of service tax by the authorities, prior to realization of the value of taxable services. The legislative intention behind the amendments was explained by the CBEC vide letter dated 29.02.2008, which is for plugging avoidance of tax on the ground of non-realization of money from associated enterprises. Since, by incorporating the explanation in Rule 6 ibid, the restriction was imposed for the first time that in case of transaction between associated enterprises, service tax has to be paid immediately ..... X X X X Extracts X X X X X X X X Extracts X X X X
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