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TMI Blog2019 (2) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. The reason attributed by the assessee was that the amount relates to value of the property which they have acquired in lieu of management fees for the service rendered to their client under Management or Business consultant Services. The appellant had not discharged service tax on the value of the property which was received as consideration for termination of the agreement so as to settle against termination of services. Show cause notice dated 15.5.2008 was issued proposing to demand service tax to the tune of Rs. 64,13,890/- along with interest and also proposing to appropriate an amount of Rs. 33,53,890/- as well as interest of Rs. 2,37,093/- which was already paid by them. The show cause notice also proposed to impose penalties. After due process of law, the original authority confirmed the demand of Rs. 64,13,890/- for the period April 2006 to December 2006 along with interest and also imposed penalty of Rs. 75 lakhs under section 78 of the Finance Act, 1994 with option to pay reduced penalty of 25%. Aggrieved, the appellants are now before the Tribunal. 2.1 On behalf of the appellant, ld. counsel Ms. Radhika Chandrasekar explained that the appellants entered into a reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of such settlement was both in nature of money and property. As the settlement took place prior to 18.4.2006, even if property was received as consideration, the value of such property cannot be subject to levy of service tax. Moreover, the provision of services was completed on 1.3.2006, when the final settlement had been executed between the parties. It was agreed by the parties to terminate the agreement for providing services as well as for paying charges for the services. The agreement was thus agreed to be freezed by parties. After 1.3.2006 there has been no rendering of service by appellant to SHRIL. 2.5 The appellant had discharged the service tax on the amount received in the nature of money in lieu of settlement agreement even though some amount was received after 18.4.2006. This is because all along the consideration received in the form of money was subject to levy of service tax and service tax is leviable on the consideration payable on the services already provided. Further service tax was payable during the disputed period on receipt basis. The appellant is therefore not contesting the service tax relating to consideration in money and is contesting the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into an agreement with the appellant for operating the various resorts owned by SHRIL. However, both the parties later agreed mutually to terminate the above agreement by a final settlement agreement dated 1.3.2006. The relevant portion of the settlement agreement is reproduced as under for better appreciation of the facts:- "AND WHEREAS the parties have had detailed discussions with regard to the settlement of accounts and the mode of payment of the settled accounts consequent to the termination of the said agreement and mutually agreed to freeze the amount payable by STERLING under the agreement dated 14.4.2005 as per the details given in the Annexure A. AND WHEREAS both the parties have agreed to put an end to the resort operation and license agreement and full and final settlement, both dated 14.4.2005 without recourse to any of the clauses of the said agreement except to the extent as stated hereunder:- 1. Sterling confirms that a sum of Rs. 3,34,81,431/- (Rupees three crores thirty four lakhs eighty one thousand and four hundred and thirty one only) is payable to AUROMATRIX as per the terms of the Resort Operation & License Agreement and Full and Final agreement bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt charged by the service provider of such service provided or to be provided. By him. xxxx xxxxx xxxxx xxxxx xxxxx Explanation. - For the purposes of this section, - (a) "consideration" includes any amount that is payable for the taxable services provided or to be provided; (b) "money" includes any currency, cheque, promissory note, letter of credit, draft pay order, travellers cheque, money order, postal remittance and other similar instruments but does not include currency that is held for its numismatic value. (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 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, where the transaction of taxable service is with any associated enterprise". 6.4 Later with effect from 18.4.2006, the said section underwent amendment which reads as under:- "SECTION 67.Valuation of taxable services for charging service tax (1) Subject to the provisions of this Chapter, where ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005. After 1.3.2006, there is no provision of service by the appellant to SHRIL. In the final settlement agreement, it is seen that parties have derived the final amount to be paid by arriving at the quantum for different periods. For example, royalty fee upto March 2006, royalty fee for the period from April 2006 to March 2007, management fee for the period April 2006 to March 2007 etc. These periods mentioned in Annexure A of the agreement does not indicate that the appellant has provided services from April 2006 to March 2007 or royalty fee was paid from April 2006 to March 2007. The periods mentioned in the said final settlement is only for the purpose quantification of the final settlement amount. The conclusion of the Commissioner that the amount settled by way of selling the immovable property is for the services provided for the period from 1.4.2006 to 31.3.2007 is incorrect. After the final settlement, undisputedly there has been no service provided by the appellant to SHRIL. Though part payments might have been received, such payments including the immovable property is for the services provided (or settled) upto 1.3.2006. It is also to be mentioned that prior to 2011, t ..... 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