INTERVALVE (I) LTD. Vs. COMMISSIONER OF CENTRAL EXCISE, PUNE-III
LAWS(CE)-2015-4-53
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on April 22,2015

Intervalve (I) Ltd. Appellant
VERSUS
Commissioner Of Central Excise, Pune -Iii Respondents

JUDGEMENT

P.S.PRUTHI,MEMBER (T) - (1.)The appellant is in appeal against impugned order of Commissioner (Appeals) confirming demand of interest of Rs. 3,91,054/ -. During the period 10 -5 -2008 to 31 -3 -2011 the appellant provided Business Auxiliary Service to their associate enterprises M/s. EL -O -Matic (India) Pvt. Ltd. The appellant paid Service Tax of Rs. 1,13,57,364/ - on receipt of the commission amount for providing the services.
1.1 The issue in the present case is what is the relevant date prescribed for payment of Service Tax when service is provided to an associate enterprise. The Order -in -Appeal refers to Sec. 67(4) of the Finance Act which deals with valuation of services. It was amended on 10 -5 -2008 to redefine 'gross amount charged' by inclusion of clause (c) to Sec. 67(4) of the Finance Act, 1994. Clause (c) read as: -

"gross amount charged" includes.......................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 account of a person liable to pay Service Tax, where the transaction of taxable service is with any associate enterprise."

Similarly, an explanation was added under third proviso to Rule 6(1) of the STR by Notification No. , dated 10 -5 -2008, which reads as under: -

"For Removal of doubts, it is hereby declared that where the transaction of taxable service is with any associate enterprises, any payment received towards the value of taxable service, in such case shall include 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 account of a person liable to pay Service Tax."

Revenue is of the view that the explanation above provides for shifting of the date of payment of Service Tax from date of receipt of payment to the date on which amount is entered in the Books of Account of the person liable to pay Service Tax, in the case of Associate Enterprises. With this view taken regarding the date of payment of Service Tax, it was held that the appellant had not paid Service Tax on the day the amount is entered in the Books of Account but paid it after receiving the payment on issue of the invoices. Accordingly, there was delay in the payment and interest of Rs. 3,91,054/ - was ordered to be paid under Sec. 75 and penalty of Rs. 10,000/ - was also imposed. Commissioner (Appeals) upheld the order of the adjudicating authority.

(2.)Heard both sides.
(3.)The learned advocate appearing for the appellant stated that proper bills were raised on the associate enterprises, the money was received through banking channels, there was no book adjustment between them and the associate enterprises and their transaction does not fall under the ambit of the said explanation under the third proviso to Rule 6(1) of the Service Tax Rules. He relied on C.B.E. & C. Circular/letter D.O.F. No. 334/1/2008 -TRU, dated 29 -2 -2008, which clarifies that Service Tax is leviable on taxable services provided by the person liable to pay Service Tax even if the amount is not actually received but the amount is credited or debited in the Books of Account of the service provider.
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