2017 (10) TMI 514 – DELHI HIGH COURT – 2018 (8) G. S. T. L. 25 (Del.) – Taxability – outstanding dues – whether the amount shown as outstanding in the books of accounts of the Assessee as on 10th May 2008 would be amenable to service tax by virtue of the amendments? – amendment made in Explanation (c) to Section 67 of the FA 1994 – an explanation was added to sub-rule (1) under Rule 6 of the STR, 1994 by N/N. 19/2008/ST dated 10th May 2008 – The CESTAT has, in the impugned order, held that the amendment was made to Section 67 of the FA 1994 as well as Rule 6 of the ST Rules only with effect from 10th May 2008 and not retrospectively. It was noted that the explanation to Rule 6 being prejudicial to the interest of the AE would, therefore, not apply retrospectively.
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Held that: – As a consequence of the above amendments, service tax was required to be paid on taxable service provided to AEs even where the consideration of such tax and services had not actually been received but had
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as well as the ST Rules cannot be made retrospective – appeal dismissed – decided against Revenue. – SERTA 7/2017 & C.M. No. 36005/2017 (stay) Dated:- 9-10-2017 – S. MURALIDHAR & PRATHIBA M. SINGH JJ. Appellant Through: Mr. Harpreet Singh, Sr. Standing Counsel with Ms. Namrata Bharti, Advocate. Respondent Through: Mr. Nikhil Nayyar, Advocate with Mr. N. Sai Vinod, Ms. Smriti Shah, Advocates. O R D E R C.M. No. 36007/2017 (Exemptions) 1. Allowed, subject to all just exceptions. C.M. No. 36006/2017 (delay of 41 days in filing) 2. For the reasons explained in the application, the delay in filing is condoned. The application is allowed. SERTA No. 7/2017 & CM No. 36005/2017 (stay) 3. This is an appeal by the Service Tax Department through the Principal Commissioner of GST under Section 35 of the Central Excise Act, 1944 ( CE Act ) read with Section 83 of the Finance Act ( FA ), 1994 against an order dated 16th December 2016 passed by the Customs, Excise & Service Tax Appellate
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ment had not yet been received, it did not pay the corresponding service tax. 5. By the FA 2008 effective from 10th May 2008, an amendment was made in Explanation (c) to Section 67 of the FA 1994 which defined the expression gross amount charged as under:- (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 accounts of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise. 6. Correspondingly, an explanation was added to sub-rule (1) under Rule 6 of the Service Tax Rules, 1994 ( ST Rules ) by Notification No. 19/2008/ST dated 10th May 2008 as under: Explanation- For the removal of doubts, it is hereby declared that where the transaction of taxable service is with any assoc
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alty. An adjudication order was passed on 28th March 2012 confirming the above demand of tax, interest and penalty against which the Assessee went in appeal before the Commissioner (Appeals) who, by the order dated 25th July 2013, dismissed the appeal. The Assessee then went in appeal before the CESTAT which, by the impugned order, has allowed the appeal and set aside the adjudication orders as well as the order in appeal. 9. The CESTAT has, in the impugned order, held that the amendment was made to Section 67 of the FA 1994 as well as Rule 6 of the ST Rules only with effect from 10th May 2008 and not retrospectively. It was noted that the explanation to Rule 6 being prejudicial to the interest of the AE would, therefore, not apply retrospectively. 10. The learned counsel for the Appellant-Department sought to urge that the explanation is merely a clarification and did not change the position that existed even prior to 10th May 2008. According to him, the service tax liability always a
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vague or ambiguous. There is also nothing to show that it was found to be vague or ambiguous by the executive. In fact, the Board circular shows that invocation of clause (ii) had never been in contemplation of the taxing authorities. xxx xxx xxx 52. As stated hereinbefore, for the aforementioned purpose, the expressions like for the removal of doubts are not conclusive. The said expressions appear to have been used under assumption that organizing games of chance would be rendition of service. We are herein not concerned as to whether it was constitutionally permissible for the Parliament to do so as we are not called upon to determine the said question but for our purpose, it would be suffice to hold that the explanation is not clarificatory or declaratory in nature. 12. In the present case, the Court finds that although the intention behind the insertion of the above Explanation to Rule 6 of ST Rules corresponding to the amended Explanation (c) to Section 67 of the FA was to bring a
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