2012 (7) TMI 410 - AT - Service Tax

Service Tax Rate Determination Based on Service Period, Not Payment Date

The Tribunal determined that the rate of service tax for services provided before 14/5/03, with payment received on or after 14/5/06, should be based on ... Applicable rate of service tax – year of bill or receipt – the services rendered prior to 14/5/03 the payment for which was received on or after 14/5/06 - Held that:- As decided in Reliance Industries Ltd. vs. CCE, Rajkot [2008 (1) TMI 86 (Tri)] that the rate of service tax chargeable is the rate in force on the date of rendering service and not the rate in force on the date receipt of payment - against revenue Waiver of the penalty under Section 76 and 77 - short paid amount had been paid only after the issue of show cause notice – Held that:- It is not a case of non-levy or short-levy of service tax on account of any fraud, willful mis-statement or suppression of fact by the respondent as the assessee have been filing ST-3 returns correctly indicating the quantum of service tax required to be paid by them - appellant has discharged service tax liability along with interest - delay in filing in the absence of malafide intention on the part of the assessee, imposition of penalty may not be warranted - against revenue Issues:1. Rate of service tax applicable on services rendered prior to 14/5/03 with payment received on or after 14/5/06.2. Penalty under Section 76 for delayed payment of service tax.Analysis:Issue 1: Rate of Service Tax ApplicableThe Tribunal examined whether the rate of service tax on services provided before 14/5/03, with payment received on or after 14/5/06, should be charged at the rate in force during the service period or the payment receipt date. Citing precedents like Reliance Industries Ltd. vs. CCE, the Tribunal held that the applicable rate is determined by the service period, not the payment date. Therefore, the rate in force during the service period (5% adv.) applied in this case, upholding the Commissioner's decision.Issue 2: Penalty under Section 76Regarding the penalty under Section 76 for delayed service tax payment, the Commissioner invoked Section 73(3) of the Finance Act, 1994 and Circular No.137/176/2006-CX-4 to waive the penalty. The Commissioner noted that the respondent accurately declared taxable service values and acknowledged the shortfall in service tax payment. The delay was attributed to financial difficulties, not intentional evasion. The Tribunal agreed that there was no fraudulent intent or misstatement by the respondent. The delayed payments were made with interest, reflecting a willingness to rectify the lapses. Since the service tax liability was acknowledged and interest was paid, the Tribunal found no basis for imposing a penalty under Section 76. Therefore, the appeal by the Revenue was rejected.In conclusion, the Tribunal upheld the Commissioner's decision on both issues, affirming the rate of service tax based on the service period and dismissing the penalty under Section 76 due to the absence of fraudulent intent or misstatement by the respondent.