TaxTMI 
TaxTMI 
2017 (12) TMI 1191
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..... ST/21/2012 has been filed by M/s Thermax Engineering Construction and Appeal No. ST/17/2012 has been filed by the revenue. The period involved in the appeals is 16.06.2005 to 31.03.2010. 2. Brief facts of the case are that M/s Thermax are engaged in "Commercial & Industrial Construction Service" and are paying service tax on the same. They were issued show cause notice dt. 22.10.2010 proposing demand on the ground that they have not paid service tax on receipt of advance from their customer which were later adjusted against the bills received on completion of stages of the contract and tax was paid on 5th of the following month when the invoices for services were raised. Thus liable to pay interest on same and are also liable to pay se....
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....and and by the revenue against dropping of demands. 4. Shri V. Sridharan, Ld. Counsel appearing for M/s Thermax submits that the service tax demand has been wrongly confirmed against them. He submits that their customer in terms of the condition of the contract pays generally 10% of the contract value as advance cum security payment and they in turn give equivalent amount of Bank Guarantee to their customer. The customer has lien over the said bank guarantee till completion of the contract. Both the advance and the bank guarantee are in the nature of security deposit to ensure contractual commitment of each other. They raise invoice on their customer on the basis of stage of completion of contract and adjust the so called proportionate a....
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....ion of Section 67A no service tax demand can be made upon advances and similar view was taken in case of CCE, LUDHIANA Vs. J.R.INDUSTRIES - 2009 (16) STR 51. Hence no service tax demand can be made. That the Finance Act does not prescribe any deemed advance as consideration towards provision of services. He also relies upon Tribunals order in case of THERMAX INSULATION LTD. Vs. CCE, PUNE - 2015 TIOL 2736 CESTAT- MUM. 4.1 He also submitted that the retention of amount out of bill amount was for specific performance of contract. They are placing purchase order on their sub contractors and take corresponding guarantee from the sub contractors. The purchase order provides for 5% of retention of bill amount. That service tax amount is paid by....
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....n the contracts is not in the nature of Earnest money. That in case of M/s Larsen & Toubro Ltd - 2016 TIOL 167 DEL, it was held by the Tribunal that service tax is payable on mobilization advance with reference to date of receipt of advance and not with reference to rendition of service. That dropping of demand on retention money is not correct as in adjudication order findings of payment of service tax has been given without verification of records. She also submits that since the assesee is not agent of Thermax Ltd demand cannot be dropped in case of services rendered abroad. The Foreign party has not directly availed the services of the assessee and no consideration was received in Foreign currency. 6. We have carefully considered the....
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....mmitted by the buyer, the seller is entitled to forfeit the earnest. 7. We find that in the Appellant case the above principles are equally applicable and hence there is no doubt to our mind that the advance cum security bank guarantee to the assessee by the contract awarding party is in the form of earnest money. Thus the same is not liable to tax. It is also found from the certificate issued by the Chartered Accountant that the aseessee has discharged service tax liability on the entire amount of such advances. We thus find no reason to hold that the said amount is liable to be taxed at the time of receipt. It became the part of consideration only when it was proportionately included in the stage wise completion of work for which invoi....
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....TR 529 (TRI) has allowed the credit. Even the Board Circular No. 122/3/2010 ST dt. 30.04.2010 permits the credit where the amount of service tax has been paid in full to the provider of service or goods. We thus do not find any reason to take a different view from the adjudicating authority and hold that the credit is available to the assessee in such circumstances. 9. Similarly in case of non-payment of service tax on Engineers sent abroad we find that it is not in dispute that the services were rendered abroad. It is also not in dispute that the main contractor of the assessee received the consideration in foreign currency who in turn made payment to the assessee. In such case we find that the services rendered by the assessee falls un....