Service tax rate based on service time, not payment. Precedent cited. Works Contract Rules argument dismissed. Appeal denied.

The court upheld the decision that the service tax rate should be based on the time of service rendition, not payment realization. Citing precedent, the court emphasized that service tax is levied on the service itself, not the payment, and the taxable event is service provision. The appellant's argument regarding Works Contract Rules was dismissed as it was not raised earlier and lacked merit. Following the precedent in a similar case, the appeal was dismissed with no costs awarded, as no substantial legal questions were raised.

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Issues:
1. Applicability of service tax rate: Whether the rate of service tax should be based on the time of realization of consideration or the time of rendition of the taxable service.

Detailed Analysis:
1. The appeal challenged an order by the Customs, Excise & Service Tax Appellate Tribunal regarding the applicable rate of service tax. The Tribunal concluded that the rate in force at the time of service rendition, not payment realization, should apply. The Revenue appealed this decision.

2. The dispute stemmed from a show cause notice alleging incorrect payment of service tax on Works Contract Service. The notice claimed that the service tax rate should be based on the time of payment receipt, citing a Ministry of Finance instruction. The appellant argued that since payments were received after a rate increase, the higher rate should apply.

3. A previous case, Vistar Construction Pvt. Ltd. v. Union of India, addressed a similar issue where service was rendered before a rate change but payment was received after. The court ruled that service tax is levied on the service itself, not the payment, and the taxable event is service rendition. Thus, the rate applicable is the one in force at the time of service provision, not payment receipt.

4. The appellant contended that Rule 3(3) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 was not considered in Vistar Construction. However, the court found no merit in this argument as the instruction in question specifically referenced these rules. Moreover, since the appellant did not raise this point earlier, it could not be introduced at this stage.

5. Following the precedent set in Vistar Construction, where the court invalidated the Ministry of Finance instruction, the present appeal was dismissed. The court held that no substantial legal questions were raised, and no costs were awarded in this matter.

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