2023-VIL-970-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Rule 3 and Rule 4 of Point of Taxation Rules, 2011 - Renting of immovable property – Receipt of part amount/earnest amount – Demand of interest due to change in rate of tax - Whether the appellant became liable to pay the entire service tax when it received the part amount/earnest amount – HELD - the Department has taken recourse to Rule 3 of the POTR, 2011 to determine the service tax liability of the appellant has applied Rule 4 of POTR, 2011 - Rule 4 of the POTR begins with the non-obstante clause clearly stating that where there is a change in the effective rate of tax, the provisions of rule 4 would invariably override the provisions of rule 3 - there was a change in the rate of service tax in May, 2012 - the very fact that there was a change in the rate of service tax clearly takes the appellant’s point of taxation from Rule 3 of POTR to Rule 4 of POTR - Further, as per Rule 4(b)(iii), the point of taxation would be the date of issuing of invoice, which in the instant case is October, 2012 - the actual provision of service of signing of the lease agreement, raising of the invoices and receipt of the bulk of the payment was in October, 2012, which was preceded by change in effective rate of service tax in May, 2012. This squarely supports the appellant’s contention that the point of taxation would be under Rule 4 of POTR - the service of provision of leased land was provided in October, 2012. It is also apparent that the invoices for the said provision of service were raised on 23.10.2012. The above two dates are crucial to determine the date of provision of service in the instant case, that too in terms of Rule 4 POTR - From said two dates, it is clear that the service was provided after change in effective rate of tax and the invoice also has been raised after the change in effective rate of tax, though the part payment was received before the change in effective rate of tax. Thus, the case of appellant gets squarely covered under Rule 4(b)(iii) POTR - In the given set of facts and applicability of Rule 4(b)(iii) POTR there remains no service tax liability on advance received by the assessee - the demands and penalties are not sustainable and set aside - the appeal is allowed
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