2015 (9) TMI 1332

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.... the Finance Act was amended. After the amendment in the case of associated enterprises, the service tax was to be paid as soon as the amount was debited or credited in the accounts and the situation prevailing prior to the date wherein service tax was to be pad only after receipt of the amount changed. Taking a view that the amended provision would apply even to the amount outstanding as on 10/05/2008, proceedings were initiated against the appellant. As a result of the proceedings, service tax demand for more than Rs. 8.98 crores with interest has been confirmed and penalty under Section 78 equal to the tax demanded has been imposed. 2. Heard both the sides. The learned advocate would rely upon the decision of the Tribunal in the case ....

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.... such service provided or to be provided. Explanation (c) to this Section defines the term "gross amount charged" and during period prior to 10-5-2008, the gross amount charged included payment by cheque, credit notes or debit notes. By amendment to this explanation w.e.f. 10-5-2008, the book adjustments and any amount credited or debited, as the case may be, to any amount whether called "suspense account" or any other name in the books of account of a person liable to pay service tax where the transaction of taxable service is with an associated enterprise was also brought within the purview of the term "gross amount charged". According to the Section 65 (7b), the term "associated enterprises" would have the same meaning as assigned to it ....

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....that the Explanation added to Rule 6(1) of Service Tax Rules, 1994 cannot be given retrospective effect. The ratio of the above judgment of the Tribunal is squarely applicable to the facts of this case and just on account of use of the words "for the removal of doubts" in the Explanation to Rule 6(1), this explanation cannot be treated as a clarificatory explanation having retrospective effect. The Apex Court in case of Union of India v. Martin Lottery Agencies Limited reported in 2009 (14) S.T.R. 593 (S.C.) has held that the explanation, though beginning with the words "for removal of doubts", is not to be treated as retrospective, when the effect of the explanation was widening the tax net. Since in this case, the 10-5-2008, the same by a....