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Sempertrans Nirlon (P) Ltd Versus Commissioner of Central Excise, Customs & Service Tax, Raigad

2017 (10) TMI 512 - CESTAT MUMBAI

Interpretation of statute - Section 67 as well as rule 6(1) of Service Tax Rules, 1994 were amended on 10-5-2008 - effective date of amendment - retrospective or prospective effect to amendment? - Held that: - CBEC vide letters No. 334/1/2008 dated 29.02.2008 clarified that service tax is required to be paid after receipt of payment or crediting/debiting of the amount in the books of accounts, whichever is earlier - reliance also placed in the decision in the case of SIFY TECHNOLOGIES LTD. Versu .....

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neral Motors India Pvt ltd Vs. Commissioner of Central Exicse, Pune [2015 (9) TMI 1097 - CESTAT MUMBAI], has roughly in similar circumstances set aside the invocation of extended period - extended period not invokable - extended period cannot be invoked in this case. - Royalty - taxability - interpretation of statute - Rule 6(1) of Service Tax Rules, 1994 - demand of interest - Held that: - identical issue has been dealt with by the Tribunal in the case of Sify Technologies Ltd. v. CCE & ST, .....

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ng service tax liability by the due date is not sustainable. - The matter is remanded to the original adjudicating authority for re-calculating the liabilities - appeal allowed by way of remand. - ST/88019/13-Mum - A/89636/17/STB - Dated:- 18-9-2017 - Mr Ramesh Nair, Member(Judicial) And Mr. Raju, Member (Technical) Shri. Madhav Rao, Advocate with Shri. Mihir Deshmukh, Advocate and Ms. Nandita Narayanan, Advocate for the Appellants Shri. M.P. Damle, Asstt. Commissioner(A.R.) for the Responde .....

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he 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 any other name, in books of account of a person liable to pay service tax Section 67 of the Finance Act was amended on the same day to include in the ambit of the term payment of any amount credited in the books of account of a person liable to pay service tax where the transaction of taxable service is with any associated enterprise. Ld. .....

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on 67 of the Finance Act and Service Tax Rules w.e.f. 10-5-2008. Ld. Counsel pointed out that the appellants have paid duty considering the date of payment as date on which liability of service tax arose. He particularly pointed out to the chart appearing as annexure to the show cause notice as a proof of same. 2.1 Ld. Counsel pointed out that show cause notice was raised for services provided right from 2005-06, which goes well beyond the maximum period of five years. He relied on the decision .....

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roduced on 18-4-2006. 2.2 Ld. Counsel relied on the decision of the Tribunal in case of Sify Technologies Ltd Vs. Commissioner of Central Excise and Service Tax, Chennai[2001(21)S.T.R 252] to assert that no retrospective effect can be given to the changes made in the Rules and in the Finance Act on 10-5-2008. Ld. Counsel further argued that no penalty in this circumstances can be imposed as has been held in the decision of General Motors India Pvt ltd Vs. Commissioner of Central Exicse, Pune[201 .....

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ificatory in nature. 4. We have gone through rivals submissions. 5. There is no doubt that duty has been discharged on the entire amount paid by the appellant. The amendment made in Section 67 of Finance Act, 1994 in the definition of "gross amount charged" was as follows: (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 and [book adjustment, and any amount credited or de .....

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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 any other name, in books of account of a person liable to pay service tax In this regard CBEC vide letters No. 334/1/2008 dated 29.02.2008 clarified as follows:- 6. Transactions between associated enterprises : 6.3 As an anti-avoidance measure, it is proposed to clarify that service tax is leviab .....

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ble under reverse charge method (Section 66A) as taxable services received from associated enterprises. For this purpose section 67 and rule 6(1) are being amended. After examining all these changes, Tribunal in case of Sify Technologies Ltd (supra) came to the following conclusion: 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 Finan .....

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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 v. Skycell Communications Ltd. [2008 (232) E.L.T. 434], the Larger Bench of the Tribunal has held that Explanation placing restrictions prejudicial to the assessee will not be retrospective. In the case of CCE, Shillong v. .....

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applicable only from the date of its introduction and not retrospectively, eventhough the Explanation uses the expression "for removal of doubts". The decision of the Tribunal in CCE, Pune v. Bajaj Auto Ltd. [1999 (111) 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 retrospec .....

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006 cannot be sustain on the appellant on the ground that Section 66A was introduced only on 18-4-2006. 5.1 The next issue to be visited is if the extended period can be invoke in these circumstances. On 10-5-2008 Section 67 of the Finance Act and Service Tax Rules 1994 were amended and specific provisions were brought in place for transaction between associate enterprises. There is no doubt about manner in which the duty was required to be discharged by the appellant after 10-5-2008. Despite su .....

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ed period cannot be invoked in this case. 5.2 It has been argued that while expenses were booked from time to time from 31-3-2007 to 31-3-2011, the royalty was paid on 3-9-2009 and on 28-1-2010. It has been argued that though the entire amount of royalty had not been paid, the tax on of entire amount of royalty payable and booked as expenses have been paid by the appellant. It has been argued that for the expenses booked prior to 10-5-2008 the liability would arise only when actual payment was m .....

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ax on the manpower supply service received by the appellant from GECAS, Ireland during 2005-2006 to 31-3-2008 period, the appellant company during the above-mentioned period was receiving the manpower supply service from GECAS, Ireland in terms of their secondment agreement w.e.f. 1st November, 2005. The amounts due to GECAS, Ireland in respect of such services were accrued by the appellant in their books of account and duly reflected in the financial statements for the relevant financial years. .....

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of Service Tax Rules, 1994 w.e.f. 10-5-2008 by adding an explanation, the service tax would become payable from 6th day of the month succeeding the month in which the amount payable by the appellant to GECAS, Ireland was debited in their books of account, as M/s. GECAS, Ireland are associated enterprises of the appellant. Accordingly for the period of delay in payment of service tax, interest on the service tax paid has been demanded under Section 75 of the Finance Act, 1994. 8. Under Section 67 .....

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y cheque, credit notes or debit notes. By amendment to this explanation w.e.f. 10-5-2008, the book adjustments and any amount credited or debited, as the case may be, to any amount whether called suspense account or any other name in the books of account of a person liable to pay service tax where the transaction of taxable service is with an associated enterprise was also brought within the purview of the term "gross amount charged". According to the Section 65(7b), the term "ass .....

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yment received towards the value of taxable service in such a 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 the service tax . The department's contention is that in view of the words "for the removal of doubts" in this explanation, this explanation has to be applied retrospectively, that is, even for the period prior to 10-5-2008 .....

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