Service tax rate follows rendition of service, not later payment receipt, for Works Contract Service liability.

Service tax under Works Contract Service was payable at the rate prevailing when the service was rendered, because rendition of service is the taxable event. Where the services were completed before 1.3.2008, the later higher rate could not be applied merely because payment was received after that date. The Revenue's reliance on a contrary circular was rejected as inconsistent with the law declared by the Supreme Court, so liability remained governed by the earlier rate in force on the date of performance.

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Issues: Whether service tax under Works Contract Service was payable at the rate applicable on the date of receipt of payment or at the rate applicable on the date when the services were rendered.

Analysis: The issue was governed by the principle that the taxable event for service tax is the rendition of service. Since the services were admittedly rendered before 1.3.2008, the rate in force on that date governed liability. The higher rate introduced from 1.3.2008 could not be applied merely because payment was received later. The circular relied upon by Revenue was held to be contrary to law as declared by the Supreme Court.

Conclusion: The rate of service tax applicable was the rate prevailing on the date of rendition of service and not the rate prevailing on the date of receipt of payment. The Revenue's appeal had no merit.

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