Court affirms service tax based on amount received, not receivable, emphasizing factual considerations.

The High Court of Calcutta upheld the decision of the lower authorities in an appeal under Section 35G of the Central Excise Act, 1944, concerning service tax liability. The court ruled in favor of the respondent, holding that service tax should be based on the amount actually received, not just the amount receivable. As the full amount was not received due to non-payment by another unit of the recipient, the court dismissed the appeal and emphasized the significance of factual considerations in determining service tax liability.

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Issues involved: Appeal under Section 35G of the Central Excise Act, 1944 for service tax liability based on a question of fact.

Analysis:
The judgment delivered by the High Court of Calcutta involved the consideration of an appeal under Section 35G of the Central Excise Act, 1944 related to service tax liability. The primary issue at hand was whether the service tax liability should be based on the amount received or the amount receivable for a particular service. The case revolved around the transportation of oil by pipeline from one location to another, where the recipient was deemed to have received only a portion of the consideration and paid service tax accordingly. The remaining amount was to be paid by another unit of the recipient, but the payment was not made, leading to a dispute regarding the service tax liability.

The respondent, represented by Mr. Chakraborty, argued that the service tax should be based on the amount actually received, not just the amount receivable. Since the full amount was not received due to non-payment by the other unit, it was contended that the service tax was not payable on the outstanding balance. The lower adjudication authorities accepted this argument and ruled in favor of the respondent, refusing to entertain the demand made by the appellant authority.

The High Court, comprising Justice I. P. Mukerji and Justice MD. Nizamuddin, upheld the decision of the lower authorities, stating that they found no reason to interfere with the discretion exercised. Consequently, the appeal under Section 35G of the Central Excise Act, 1944 and the connected application were dismissed. The judgment highlighted the importance of factual considerations in determining service tax liability and emphasized the distinction between the amount received and the amount merely receivable in such cases.

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