2025-VIL-1808-CESTAT-CHE-ST
  1. Home
  2. 2025-VIL-1808-CESTAT-CHE-ST

SERVICE TAX CESTAT Cases

Service Tax - Point of Taxation Rules 2011, Payment on receipt basis as payments were received belatedly - Appellant was paying service tax on receipt basis instead of billed basis even after the Point of Taxation Rules (POTR), 2011 came into effect from July 1, 2011 requiring payment of service tax on accrual basis – Demand of tax alongwith interest and penalties under Sections 77 and 78 of the Finance Act, 1994 – Application of POTR 2011 on the bills raised and credit notes issued for the deficiency in service - Whether the service tax amount shown in the credit note is liable for deduction from the original billed amount after 1.7.2011 – HELD - Prior to POTR, 2011, service tax was paid on collection basis, meaning it was due only when the service provider received payment from the client. For the invoices raised prior to 1.7.2011, the reduction of value based on actual basis for Rs.3,73,977/- is in order and has to be allowed as it is squarely covered by Rule 6(1) of Central Excise Rules 2002 i.e. prior to POTR Period - For the balance amount of Rs.10,75,681/-, it is covered by POTR for which the Adjudicating Authority has given detailed/well-reasoned findings. The averment of the assessee that he could not pay the tax dues within the stipulated time due to financial crisis cannot be considered as a reasonable cause as the tax payment is mandated by the Law. Even if the tax is held to be in excess due to realization at a later date, the excess paid tax can be adjusted against the tax liability for the succeeding month. Therefore, once the Invoice is raised, the assessee should have paid the due tax on the due date and later on they should have adjusted any excess payment in the tax liability of the succeeding month as has been held in the impugned order. It is clear that it is a revenue neutral situation in both the periods i.e. pre and post 01.07.2011 for the Appellant, however, the postulates laid down post 01.07.2011 is very clear, that it should be on accrual basis only. Therefore, the demand of Rs.10,75,681/- along with interest is upheld – the appeal is answered partly in favour of the Department as well as the Appellant - The appellant paid service tax on the lesser amount, which is arrived at after mutual understanding based on the actual man hours consumed on the maintenance work and has issued credit notes in such cases – HELD - Appellant contends that CENVAT credit to the tune of Rs.14,84,423/- referred to in their letter dated 19.12.2012 was never considered by the Commissioner. There is no proof to verify CENVAT reversal by the Appellant, and no proof submitted of having debited the same in the CENVAT Credit Ledger nor abstracted copy of the same has been placed before the Adjudicating Authority for verification. So, unable to agree to the contention of the Appellant on this issue. There is a mention of Availment of CENVAT Credit, but no proof of debit. Therefore, this amount of service tax of Rs.14,84,423/- is payable by the Appellant - Invocation of extended period – HELD - the Appellant has raised Invoices/Credit Notes mentioning Service Tax, the compliance of the Appellant in discharging the Tax along with interest before the issue of SCN though the Appellant was facing liquidity crisis with 50 % of the amount as receivables deserves a special mention. Further the Department has collected the details from the Appellant and the ST-3 returns and it is also an interpretative issue on the Taxability as contended by the Appellant. In an era of Trade liberalization, imposing stiff penalties will deter the trade and be counterproductive - the invocation of extended period is not justified. Consequently, the imposition of Penalty under Section 78 of FA 1994 i.e. penalty equal to demand will automatically fails to sustain – Further, penalty under Section 77 of FA 1994 is not imposable as the appellant has obtained registration, filed returns, raised Invoices and Credit Notes indicating Service Tax and paid a large portion of the Tax before issue of SCN along with interest and as such the penalty under Section 77 is not imposable and is ordered to be set aside.
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Kasi Viswanathan V

Weekly Summary

VIL Video

GSTR-9 & GSTR-9C of FY24-25
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?