TaxTMI 
TaxTMI 
2013 (2) TMI 52
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.... as they raise common issues. Both the writ petitions are directed against the instruction dated 28.04.2008 issued by the Tax Research Unit, Department of Revenue, Ministry of Finance, Government of India purportedly in exercise of the powers under Section 37B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. The petitioners in these writ petitions challenge the said instruction on the ground that it is contrary to the law as declared by the Supreme Court. 2. The main issue in these writ petitions is with regard to the applicability of the rate of service tax in respect of the Works Contract Service which is defined in Section 65(105)(zzzza) of the Finance Act, 1994. The case of the petitioner is that the sai....
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....ly understood by the petitioner and the respondent that the challenge to the show cause notice dated 16.02.2009 is only limited to this demand of Rs. 1,43,191/- and insofar as the remaining portion of the show cause notice is concerned that is not the subject matter of this writ petition and has been challenged separately by way of another writ petition with which we are not concerned today. 5. In so far as the WP(C) 3632/2012 is concerned that petition also challenges the instruction dated 28.04.2008 but, in addition, a challenge has been made to the show cause notice dated 30.9.2009 and the adjudication order dated 28.03.2012 whereby a demand of Rs. 3,16,329/- has been confirmed against the petitioner. The said sum of Rs. 3,16,3....
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....er (Service Tax), Delhi and copy endorsed to Commissioner (Service Tax), CBEC seeking clarification on the applicable rate of service tax for the Works Contract service [Sec.65 (105)(zzzza)] where the payment for the said service provided or to be provided is received on or after 1.3.2008. 2. A person providing Works Contract service can opt to pay service tax under Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. As per the composition scheme, the service provider was having an option to pay 2% of the gross amount charged for the works contract as service tax. However, the rate of 2% has been revised to 4% with effect from 1.3.2008. Commissioner (ST), Delhi has indicated his view that ....
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....i) Director General, Directorate General of Service Tax, 9th Floor, Piramal Chambers, Jijibhoy Lane, Lalbaug, Parel, Mumbai-400012 (iii) Commissioners of Service Tax, Ahmedabad/ Bangalore/Chennai/Delhi/Kolkata/ Mumbai" 7. Ongoing through the said instruction and particularly para 3 thereof it appears that that the view of the respondents is that service tax becomes chargeable on receipt of payment for the service whether or not the services are performed. This view is clearly wrong. We say so because the Supreme Court in the case of Association of Leasing & Financial Service Companies Vs. UOI: 2010 (20) STR 417 (SC) has categorically held as under: "Thus, the impugned tax is levied on these services as taxable services. It is not a....
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....as to what is the taxable event. In that context we had held that the taxable event as per the Finance Act, 1994 was the providing or rendition of the taxable services. This is exactly what the Supreme Court had held in Association of Leasing & Financial Service Companies (supra). 10. Therefore, the rate of tax applicable on the date on which the services were rendered would be the one that would be relevant and not the rate of tax on the date on which payments were received. The instruction dated 28.04.2008 which is contrary to the law declared by the Supreme Court is clearly invalid. In Commissioner of Central Central Excise, Bolpur Vs. Ratan Melting & Wire Industries 2008 (12) STR 416 (SC), a constitution bench of the Supreme Court ob....