Custom, Excise & Service Tax Tribunal
Cst, New Delhi vs M/S Lea Associates South Asia Pvt. Ltd on 1 July, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing/Order : 1.7.2014
No. ST/Stay/4853/2012 &
ST/3843/2012-CU(DB)
[Arising out of Order-in-Appeal No. 163/S. Tax/D-II/2012 dated 5.9.2012 passed by the Commissioner (Appeals), Central Excise, New Delhi]
For Approval & Signature :
Honble Mr. Justice G. Raghuram, President
Honble Mr. R.K. Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
CST, New Delhi Appellant
Vs.
M/s Lea Associates South Asia Pvt. Ltd. Respondent
Appearance:
Shri Yashpal Sharma, D.R. - for the appellant Shri N. Narasimhan, C.A. - for the respondent Coram : Honble Mr. Justice G. Raghuram, President Honble Mr. R.K. Singh, Member (Technical) F. Order No. 52688/2014 Per Justice G. Raghuram :
At the stage of considering the stay application, since the substantive issue in the appeal falls within a narrow compass, we dispose the appeal after hearing the ld. Counsel for the appellant and the ld. D.R. for the respondent/Revenue. Pre-deposit is dispensed with.
2. Revenue has preferred the appeal against the order of the Commissioner (Appeals), Delhi-II dated 5.9.2012, allowing an appeal preferred by the respondent/assessee and reversing the Order-in-Original dated 5.12.2011 passed by the Assistant Commissioner, Anti-Evasion, Service Tax Commissionerate, New Delhi.
3. The facts in brief are that the asssesse had raised bills on the recipient of consulting engineer service provided by the assessee, prior to 13.5.2003. Payment on these bills was however received subsequent to 13.5.2003. With effect from 13.5.2003, the rate of service tax was raised from 5% to 8%. For realising the alleged under remitted quantum of tax, proceedings were initiated culminating into the adjudication order passed by the Assistant Commissioner, New Delhi. This Authority confirmed a demand for Rs.93,516/- apart from interest and penalty.
4. Aggrieved thereby, the assessee preferred an appeal. The appellate Commissioner considered copies of the relevant invoices, payment advices and copies of cheques evidencing receipt of payments by the assessee and concluded that the assessee had provided month wise and return wise details of invoices disclosing that rendition of the taxable service was prior to 13.5.2003 i.e. prior to the date the rate of service tax was increased from 5% to 8%; and therefore liability to service tax was at 5% and not 8%. On the basis of above conclusion, the appeal was allowed.
5. Revenue has preferred the appeal on the basis of a CBEC letter dated 28.4.2008 which purports to state that the rate applicable to a taxable transaction shall be the rate in force at the time the service tax became chargeable, meaning the date on which the taxable payment is received. The relevant portion of the CBEC letter is extracted in paragraph G of the grounds of appeal and reads the rates applicable to a taxable transaction shall be the rate in force at the time the service tax became chargeable. The grounds of appeal also refer to Rule 5B of Service Tax Rules, 1994, which enjoins that the rate of tax in case of services provided or to be provided, shall be the rate prevailing at the time when the service is deemed to have been provided under Rules made in this regard.
6. It is therefore clear that neither the CBEC letter nor Rule 5B of Service Tax Rules, 1994 authorise levy of service tax, at a rate not in force on the date of rendition of the taxable service, which is the taxable event. However, the Review Commissioners appear to have fundamentally misguided themselves as to what is clearly a basic principle, that only the rate of tax prevailing at the time of rendition of the taxable service could be levied and collected. The Delhi High Court in CST Vs. Consulting Engineering Services (I) Pvt. Ltd. - 2013 (30) STR 586 (Del.) has reiterated this well established and axiomatic position in law.
7. On the aforesaid analysis, the order of the appellate Commissioner impugned by Revenue in this appeal, is impeccable and warrants no appellate interference. The appeal is fundamentally mis-conceived, deserves rejection and is accordingly dismissed. No costs.
(Justice G. Raghuram) President (R.K. Singh) Member (Technical) RM 1