TaxTMI 
TaxTMI 
2020 (10) TMI 477
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....nder section 73 of Finance Act, 1994, with applicable interest under section 75 of Finance Act, 1994, and the imposition of penalty of like amount under section 78 of Finance Act, 1994 and of Rs. 10,000 under section 77 of Finance Act, 1994. The dispute concerns the stage - on receipt or on issue of the bill - at which 'mobilization advance' paid to the appellant is leviable to tax. 2. The demand is founded on the factual matrix of 'mobilization advance' having been received by the appellant in pursuance of contracts entered into with recipients of services rendered by them applied to the legal framework established by amendments to section 67 of Finance Act, 1994 in 2005, 2006 and 2008, the clarification issued in circular no. BI/6/2005....
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....adjudicating authority that tax has been discharged on the entire contractual liability is assailed in no uncertain terms by Learned Counsel who reiterates the reliance placed on the decision of Thermax Instrumentation Ltd v. Commissioner of Central Excise, Ludhiana [2016 (42) STR 19] and in Commissioner of Central Excise, Ludhiana v. JR Industries [2009 (16) STR 51]. 4. Learned Authorized Representative places particular emphasis on section 67(3) of Finance Act, 1994, the proviso to rule 6 of Service Tax Rules, 1994 and the circular of Central Board of Excise & Customs (CBEC). According to him, the decision of the Tribunal in Central Power Research Institute v. Commissioner of Central Excise, Bhopal [2017-TIOL-2504-CESTAT-DEL] has place....
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....l as by Learned Authorized Representative, on the unarguable implications of amendment to section 65 and 67 of Finance Act, 1994. The first of such was the incorporating of 'or to be provided' in section 67 to enlarge the reach of the taxable services and the insertion of Explanation 3 below by Finance Act, 2005 The second, effected in 2004, is the incorporation of Explanation below the proviso in rule 6(1) of Service Tax Rules, 1994. The combined consequence, in the finding of the adjudicating authority, is that 'advance' is payment of consideration for taxable services to be provided and, hence, liable to tax upon receipt. The explanation offered by the appellant of discharge of tax liability on the entire contractual value did not find f....
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....rly so, as, till the notification of the said Rules, tax was levied on 'receipt' basis and not on 'accrual' basis. The recognition of this principle did not derogate from the inclusion of 'advance' payments in the grouping of 'receipts' that were always liable to tax. We are not convinced by the arguments, put forth on behalf of Revenue, that the amendment to rule 6(1) of Service Tax Rules, 1994 or the incorporation effected in section 67 of Finance Act, 1994 were intended to tax all payments at the time of receipt. From a plain reading of the newly inserted Explanation in the Service Tax Rules, 1994, it would appear that intent was to ensure the distribution of the said advances to the month, quarter or such other period to which the rende....
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.... but only as is relatable to the service rendered. Impliedly, a monetary transaction between two persons does not purport to be for 'taxable services' alone and, to the extent of attribution to a service that is not taxable, is not liable for inclusion in the computation of tax liability. Hence, the consideration that is not attributable to 'taxable service' cannot be presumed to be inclusive of tax element and, thereby, to be subject to tax, whether received an advance or subsequently. 9. The several contracts provide for the payment to be made at different, pre-determined stages of performance and are, generally, subject to evaluation of the work undertaken. It is also seen that such appraisal, as a prelude to making payments, is not u....