TMI Blog2023 (12) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... s, to the extent they have been received in the tax period under consideration (i.e., 2008-09), would be taxable. The adjudicating authority is directed, accordingly, to bring so much of the advance to tax as has been received in this tax period, provided that there is nothing on the record to show that the advances so received were subsequently refunded. The appellant has also contended that these amounts have already suffered tax in the subsequent / final tax period. If this is the case, then it would not be open to the Revenue to levy tax once again. Hence, the adjudicating authority is directed to examine whether the above contention of the appellant is correct so that there is no double taxation. Service tax on unbilled revenue - HELD THAT:- Unbilled revenue represents amounts attributable to services already performed, which have accrued but which have not fallen due for payment or invoicing in terms of the agreement between the parties. It therefore represents revenue which has not yet become recoverable from the customer of the appellant. The fact that these amounts continued at the end of the relevant tax period to appear as unbilled revenue demonstrates that no recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer of the assessee was to make an advance payment of 25% of the contract price. It is the further case of the Revenue that, from the financial statements like balance sheet and Profit Loss account for the year 2008 09, at Schedule 8 of the Balance Sheet, an amount of Rs.37,55,76,899/- was shown as current liabilities and provisions advances from customers. 2.2 Entertaining a doubt that as per the balance sheet for the year under challenge and the Profit Loss account, the assessee was liable to pay Service Tax on the amount received on accrual basis at the time of debiting / crediting of transactions with the associated enterprise in the books of account, as per Explanation (c) to Section 67 of the Finance Act, 1994, read with explanation to Rule 61 of the Service Tax Rules, 1994, a Show Cause Notice dated 07.04.2010 came to be issued alleging as per the above and with a proposition to demand appropriate Service Tax, applicable interest under Section 75 and penalty under Sections 76 and 78 of the Finance Act, 1994. In the said Show Cause Notice, the Revenue has, by alleging suppression of the actual taxable income in their S.T.-3 returns with an intention to evade payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and its customer were related. 4.2 Referring to the provisions of Section 65(105) and Section 67 of the Finance Act vis- -vis the balance sheet of the assessee, the authority refers to Section 67(3) - the gross amount charged to include any amount received towards the taxable service before, during or after provision of such service - and hence the advance received in the respect of the service to be provided by the service provider should be recognised as the value for the purpose of charging Service Tax. Hence in view of the above, he holds that not only the services provided, but services to be provided are also taxable; consideration includes amount received towards the service provided as well as to be provided and gross amount charged with reference to associate enterprise would include even book adjustments of transactions with the associate enterprise, by means of debiting/crediting of the book of accounts. In view of the above, an amount of Rs.37,55,76,899/- treated as advance in the books of accounts of the assessee was held to be liable to Service Tax for the year under dispute. 4.3 With regard to the Service Tax liability on amount of Rs.45,43,62,388/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led before this forum. 6. Heard Shri R. Anish Kumar, Ld. Advocate for appellant and Shri N. Satyanarayanan, Ld. Assistant Commissioner for the Revenue. 7. After considering the rival contentions, we find that the following three issues emerge for our consideration: - (1) Whether the advance of Rs.37,55,76,899/- is liable to Service Tax? (2) Whether the unbilled revenue of Rs.23,75,85,656/- is liable to Service Tax? and (3) Whether the appellant is entitled to make payment of tax in respect of the amounts referred to above out of the CENVAT Credit standing to its credit? 8.1 We find at the threshold that it is most relevant to refer to Rule 6 of the Service Tax Rules, 1994, as it stood during the period of dispute i.e., 2008-09. The same reads as under: - Rule 6. Payment of service tax. (1) The service tax shall be paid to the credit of the Central Government, - (i) by the 6th day of the month, if the duty is deposited electronically through internet banking; and (ii) by the 5th day of the month, in any other case, immediately following the calendar month in which the payments are received, towards the value of taxable services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. It therefore represents revenue which has not yet become recoverable from the customer of the appellant. The fact that these amounts continued at the end of the relevant tax period to appear as unbilled revenue demonstrates that no receipts had been made in that respect. Therefore, there is no question that the unbilled revenue did not represent consideration though which has been received by the appellant for services rendered, they would be taxable only at the time of receipt in accordance with the provisions of Rule 6 ibid. 9.2 Therefore, we are of the clear view that the unbilled revenue of Rs.23,75,85,656/- cannot be brought to tax. 10. On the third issue to the extent to which taxes actually fall due as a result of our findings above, the appellant would no doubt be entitled to make good the taxes that are due by means of utilization of credit available to it. 11.1 Various contentions have been raised with respect to Explanation (c) to Section 67 of the Finance Act, 1994 in relation to the unbilled revenue. It is necessary for us to deal with these contentions as they were raised although, for the reasons we will presently set forth, they do not have a bearin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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