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TMI Blog2023 (9) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... aid MOU clearly provided that the lease deed shall be executed only after fiscal incentives had been provided by the Government of Rajasthan; failing which the lease deed will not be entered and the amount paid will have to be refunded to the appellant as provided in para 8.1 of MOU. Thereafter the appellants received Rs. 10,62,33,750/- in March 2012 and the balance amount of Rs. 60,19,91,250/-was received in October, 2012. The lease deed was executed on 23.10.2012. The appellant discharged the service tax of Rs. 7,44,06,119/- and interest of Rs. 23,31,116/- on delay in payment of service tax of Rs. 1,31,31,492/- payable on Rs. 10,62,33,750/- received in March 2012 on 27.11.2012. The Department initiated investigation and on completion, show cause notice bearing C. No. V(H)/Adj-I/ST/03/2016 dated 31.1.2016 was issued alleging that service tax was payable in March 2012 on the entire amount, and interest on the delayed payment. The show cause notice also alleged that the appellants had collected Rs. 1,45,89,436/- as excess amount. Vide the impugned order-in-original No. JAI-EXCUS-000-COM-25-16-17 dated 1.2.2017 the demand of (i) Rs. 7,29,47,175/- (ii) Rs. 21,88,416/- collected in exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the service is complete only on signing of the lease agreement. Thus, the two events of raising of invoice and providing of service occurred post the change in the rate of service tax. Therefore, service tax is payable at the revised rate and not at the old rate. He relied on the decision in the case of Paharpur Cooling Towers Ltd. - 2015 (37) STR 550 (Tri. - Del.) and Vistar Construction (P) Ltd. - 2013 (31) STR 129 (Del.) to reiterate his contention that levy of service is on rendition of service and hence service tax is not applicable on the receipt of advances. He further submitted that Section 67A was introduced w.e.f 18.5.2012 and the said section also provides for levy of tax on the services provided or to be provided. Hence the levy of service tax is required to be made based on the rendering of the service. 6. The learned counsel also stated that the demand of interest for the period April 2012 to November 2012 for the amount received in March 2012 was not sustainable as there was no demand for the said interest in the show cause notice. The order in para 44 admits that the show cause notice has not raised the demand for the period April 2012 to November 2012 for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Rs. 10,62,33,750/-.'' This liability would have to be examined within the contours of the Point of Taxation Rules, 2011 (hereinafter referred to as the POTR).It has been argued before us that the Department has taken recourse to Rule 3 of the POTR, to determine the service tax liability of the appellant, whereas the Rule to be applied in their case is Rule 4 of POTR. In order to appreciate the argument, it would be appropriate to reproduce the relevant rules. "3. Determination of point of taxation.- For the purposes of these rules, unless otherwise provided, 'point of taxation' shall be,- (a) the time when the invoice for the service provided or agreed to be provided is issued: Provided that where the invoice is not issued within the time period specified in rule 4A of the Service Tax Rules,1994, the point of taxation shall be the date of completion of provision of the service. (b) in a case, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he receives such payment, to the extent of such payment. Provided that for the purposes of clauses (a) and (b),- (i) in case of continuous supply of ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n effective rate of tax, the point of taxation shall be the date of receipt of payment or date of issuance of invoice, whichever is earlier; or (iii) where the invoice has also been raised after the change in effective rate of tax but the payment has been received before the change in effective rate of tax, the point of taxation shall be date of issuing of invoice. Explanation.- Omitted" 10. We note that Rule 4 of the POTR begins with the non-obstante clause clearly stating that where there is a change in the effective rate of tax, the provisions of rule 4 would invariably override the provisions of rule 3. Hence it is first to be established as to the appellant's case falls within Rule 4 as contended by the learned counsel, or under rule 3 as contended by the Department. It would be appropriate to reproduce the calendar of events as submitted by the appellant. Sl No. Description of event Date/Amount 1 MOU and Advance amount Rs. 10,62,33,750/-received March 2012 2 Change in Rate of Service Tax from 10.30% to 12.36% May,2012 3 Lease Agreement signed and remaining amount received Rs. 60,19,91,250/-. October 2012 4 Invoice Nos. MWCL/2012-13/M/06 & MWCL/2012-13/M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il & Others (supra) the non-obstante clause is a legislative device which is usually employed to give overriding effect to certain provisions were some other contrary provisions that may be found either in the same enactment or some other enactment and avoid the operation and effect of all contrary provisions. Effect of a non-obstante clause is the opposite of provision which states "subject to". Thus, a non-obstante clause is used where contrary provisions exist. In the instant case, Note3 to chapter 39 specifically states that certain headings in chapter 39 "apply only to goods of a kind produced by chemical synthesis". While amending note 6 states that conversion from one primary form to another amounts to manufacture. Processes of conversion from one primary form to another mechanical and not chemical processes. Therefore, the provisions of notes 3 and 6 are contrary. The use of the non-obstante clause," notwithstanding anything contained in Note3 to this chapter" gives effect to the provision of note 6 by avoiding the operation of the contrary provision in Note3. Such a provision is a new provision and not a clarification of any ambiguity in an existing provision..........". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided or agreed to be provided. Obviously, Section 67A would only have prospective applicability. Thus, reiterated as the advance receipt by the appellant has been adjusted in due course as and when the service was provided coupled the fact that unless the service was provided, the rate of which the service tax was repaid would not be known, it is difficult to sustain the owner with regard to confirmation of the impugned interest." 15. This view was upheld in the case of Commissioner of Central Excise, Pune Vs Thermax Engineering Construction Co Ltd [2019(22) GSTL 80 (Tri-Mum)]. The relevant paras are reproduced hereinafter; "6. We have carefully considered the submissions made by both the sides. In case of Advance receipt from the customers we find that amount was received by the assessee as security/guarantee amount. It is obvious that for big contract which spread over years, the service provider needs to have specific performance guarantee from their customer. The assessee in turn of such security amount has issued Bank Guarantee amount to their customer. We find from the contract with Chettinand Cement Corporation Ltd., produced by the Appellant that it provides for Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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