Customs, Excise and Gold Tribunal - Bangalore
Tempest Advertising (P) Ltd. vs The Commissioner Of Central Excise And ... on 15 September, 2006
Equivalent citations: 2007(115)ECC59, 2007ECR59(TRI.-BANGALORE), [2007]8STJ354(CESTAT-BANGALORE), 2007[5]S.T.R.312, [2007]9STT168, (2007)6VST687(CESTAT-BLORE)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Review No. 2/2006 ST dated 21.3.2006 by which the Commissioner (A) has reviewed the Order-in-Original No. 3/2004 ST dated 22.12.2004 dropping the demands by the Asst. Commissioner. The Revenue proceeded to demand Service Tax based on the Profit and Loss Account and the returns filed with the Income Tax. The appellant's contention is that in terms of the Income Tax Act, they have to show the gross receipts as per the Income Tax Returns, while in the case of Service Tax, the Service Tax is payable on the gross receipts received by them.
2. The Asst. Commissioner after due verification found that the amount shown in the Income Tax returns had not been received by the assessee and therefore, the taxable amounts shown in the Profit and Loss Account have not been realized, hence the assessee is not liable to pay Service Tax on the amounts still due from the parties and hence, he dropped the proceedings. The Commissioner in his Review Order noted the Board's Circular No. 341/43/96/TRU dated 31.10.1996 and has shown in the table all amounts which are found in the Profit and Loss Account on the gross receipts; production amount as received by the assessee; 15% Commissioner on gross receipts of net production. He has also shown the amount paid by them and has demanded short levy.
3. It is the submission of the appellants that the Commissioner has committed an error in proceeding to levy tax on the gross receipts as per the Profit and Loss Account. The appellants paid the Service Tax on the amounts received and collected by them and had clearly complied with the Board's Circular. They are not required to pay the Service Tax in advance on the gross receipts shown in the Profit and Loss account. This proposition has been accepted by this Bench in the case of BPL Ltd. v. CST, Bangalore by Final Order No. 1065/2006 dated 19.6.2006 and prays for allowing the appeal.
4. The learned JDR defended the order and contended that the Order passed by the Commissioner is just and proper and should be upheld.
5. On a careful consideration and perusal of the Order-in-Original, it is very clear that the Revenue proceeded to levy Service Tax on the basis of gross receipts shown in the Profit and Loss Account and the details shown in the Income Tax Returns. The details filed under Income Tax Returns are different from the returns that have to be filed in terms of the Service Tax. In the case of Service Tax, the tax is required to be calculated on total receipts and not on the amount still due from the customers. This position has been clarified in the cited case of BPL Ltd. The findings recorded in Para 2 is reproduced herein below.
2. We have heard both sides in the matter and have perused the records. T. Velu Pillai & Co., Chartered Accountants have issued certificate based on the verification of books of accounts of the appellant company, that till date the appellant did not receive payments towards the debit notes raised for various engineering services provided to M/s B.S. Refrigerators Ltd., and M/s B.S. Appliance Ltd., Bangalore. The appellants had been filing returns regularly and informing the department about the outstanding debit notes due to them. There is no dispute about this fact about the appellants not having received the services amounts including the tax from their customers and they had reflected these amounts under the heading sundry debtors. Section 68 of the Finance Act 1994 and Rule 6 of the Service Tax Rules does not permit recovery of the tax unless the payments are received. Both the Section 68 and Rule 6 (1) are reproduced herein below:
Section 68: Payment of service tax - (1) Every person providing taxable service to any person shall pay service tax at the rate specified in Section 66 in such manner and within such period as may be prescribed.
(2) Notwithstanding anything contained in Sub-section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in Section 66and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service.
Rule 6(1) Payment of service tax. The service tax shall be paid to the credit of the Central Government by the 5th of the month immediately following the calendar month in which the payments are received, towards the value of taxable services.
The tribunal has granted full stay by Stay Order No. 334/06 dated 24.3.06, in view of the fact that appellants have not received value of taxable services from their customers in terms of Section 68 and Rule 6 (1) of Service Tax Rules. The service tax is not liable to be paid as the assessee has not received the payments towards the value of taxable service. The appellants have been filing returns and informing the department about the non-receipt of the value of services rendered by their customers and about the non-payment of the same. The department is aware of these facts as the returns have been filed. Therefore, the issue of show cause notice beyond the period of one year is barred by time. For the reasons stated above, the appeal is thus allowed with consequential relief if any.
5.1 The appellant's contention is required to be accepted. The order passed by the Asst. Commissioner is correct and the same is upheld. The impugned order is not just and proper and hence, the appeal is allowed with consequential relief, if any.
(Pronounced and dictated in open Court)