TMI Blog2017 (10) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... td 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, LTU, Chennai, wherein the Tribunal has held that the Explanation added to Rule 6(1) of Service Tax Rules, 1994 cannot be given retrospective effect. The ratio of the above judgment of the Tribunal is squarely applicable to the facts of this case and just on account of use of the words for the removal of doubts in the Explanation to Rule 6(1), this explanation cannot be treated as a clarificatory explanation having retrospective effect - the demand for the interest for alleged delay in discharging 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/89636/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms, Vadodara Vs. Schott Glass India Private Limited[2009(14) S.T.R. 146(Gujarat)] to assert that period of limitation relates to the period when services are provided and not the date of payment of duty, especially in the case of reverse charge mechanism. He further pointed out that in respect of services received prior to 18-4-2006 no service tax can be demanded on reverse charge basis as Section 66A itself was introduced 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[2015(40) STR 962]. 3. Ld. A.R. relies on the impugned order. He also relied on the decision of this tribunal in case of Commissioner of Central Exicse, Kanpur Vs. Heera Panna Guest House[2012(26)S.T.R. 36(Tri. Del)] wherein an explanation added w.e.f. 1-6-2007 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended. 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 Finance Act, 1994 nor 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 effect to the Explanation inserted in Rule 6 of the Service Tax Rules. The Legislative intention behind the amendments was explained by the Board as 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 v. Skycell Communications Ltd. [2008 (232) E.L.T . 434], the Lar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssert that extended period of limitation should not be invoked and penalty should not be levied. We find that Tribunal in the aforesaid decision has roughly in similar circumstances set aside the invocation of extended period. Registry on the same it is held that extended 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 made i.e. 3-9-2009 and 28-1-2010. It has been argued that liability as applicable at the time of provision of service would be applicable. For this assertion appellant are relied on the decision of this Tribunal in case of Gecas Services India Pvt. Ltd Versus Commr. of Service Tax, New Delhi[2014 (36) S.T.R. 556 (Tri. - Del.)]. In the said decision Tribunal has observed as under:- 7. As regards the demand of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th an associated enterprise was also brought within the purview of the term gross amount charged . According to the Section 65(7b), the term associated enterprises would have the same meaning as assigned to it in Section 92A of Income tax Act, 1961. Along with this amendment to explanation (c) to Section 67, Rule 6(1) of the Service Tax Rules, 1994 was also amended and the following explanation was added to the third proviso to Rule 6(1) of the Service Tax Rules, 1994 Explanation - for the removal of doubts it is hereby declared that where the transaction of any taxable service is with any associated enterprise, any payment 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 and, hence, the debit entries made by the appellant in their books of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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