2013 (7) TMI 665 - AT - Service Tax

Tribunal Upholds Service Tax Rate Determination Based on Service Date, Not Payment

CST & ST, Delhi Versus M/s Iscent E Services Pvt. Ltd.

The Tribunal upheld the Order in Appeal, ruling that the service tax rate is determined based on the date of providing the service, not the date of ... Date for applicability of rate service tax – assessee provided the Manpower Recruitment Services – service tax was demanded as short paid along with interest and penalty - whether rate is applicable on date of providing the taxable service or on the date of receipt the payment – what is relevant date for applicability of the rate of service tax - Held that:- The taxable event is the date of providing the service and not the date of receiving the payment - Court followed the judgment of Commissioner of Central Excise Cus., Vadodara Vs Schott Glass India Pvt. Ltd.(2009 (1) TMI 45 - HIGH COURT OF GUJARAT) – no infirmity in the order of Commissioner – appeal decided against revenue. Issues Involved:Interpretation of relevant date for applicability of service tax rate - whether based on the date of providing the taxable service or the date of payment received.Analysis:Issue 1: Interpretation of relevant date for applicability of service tax rateThe appeal was filed by the Revenue against an Order in Appeal regarding a Show Cause Notice issued to M/s Iscent E Services Pvt. Ltd. for demanding service tax due to short payment. The original authority confirmed the demand, but the Commissioner (Appeal) allowed the respondent's appeal, leading to the Revenue challenging the order. The key issue in this case was determining the relevant date for the applicability of the service tax rate - whether it should be based on the date of providing the taxable service or the date of receiving the payment. The Revenue contended that the payment was received after the service was provided, and the rates of service tax had been revised upwards by then. However, citing judgments from the Gujarat High Court and the Delhi High Court, it was established that the taxable event is the date of providing the service, not the date of receiving the payment. The courts held that the service tax rate is applicable based on the date of providing the service, aligning with the principle that the taxable event is the provision of service itself. Consequently, the Tribunal found no fault in the Order in Appeal and dismissed the Revenue's appeal.In conclusion, the Tribunal's judgment clarified the interpretation of the relevant date for the applicability of the service tax rate, emphasizing that the date of providing the service determines the applicable rate, not the date of payment receipt. This decision was supported by previous court rulings, reinforcing the principle that the taxable event in service tax matters is the provision of the service itself.