TaxTMI 
TaxTMI 
2023 (2) TMI 1311
X X X X Extracts X X X X
X X X X Extracts X X X X
....scribers of M/s. Aircel Ltd. visit Chennai, they can utilize the services of the dealers and distributors of M/s. ACL for the purchase of recharge cards/top-up cards. Similarly, when the subscribers of M/s. ACL visit places in the territorial jurisdiction of the State of Tamil Nadu other than Chennai, the subscribers can utilize the services of the dealers and distributors of M/s. Aircel Ltd. for the purchase of recharge cards/top-up cards. At the time of sale of the recharge cards/top-up cards, the respective dealers collected appropriate Service Tax due thereon from the customers and paid into the Government account every month. The amount due to each of these companies was settled between these companies through credit notes raised on each other. 2.1. M/s. Aircel Ltd., who is the appellant herein, had filed ST-3 returns for the period from 01.10.2007 to 31.03.2008 on 23.04.2008. Subsequently, they filed revised return for the same period on 03.07.2008 along with a letter dated 30.06.2008 wherein they had explained the circumstances under which the revised return was filed. They also furnished copies of the credit notes raised. 2.2. On perusal of the revised return, it appeared....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pellant, he may purchase the RCV from the dealer of the appellant. In such cases, the telecommunication services are actually provided by M/s. ACL. However, the Service Tax on the value of such vouchers which are sold to the subscribers of M/s. ACL would have been paid by the appellant even though the services are actually provided by M/s. ACL. This led to a situation where Service Tax payments were made in compliance with law for services to be provided, though the taxable services were not rendered by the person discharging the Service Tax. During the impugned period, the appellant had discharged Service Tax of Rs. 2,19,36,614/- for the period ending 31.03.2008 against the RCVs provided to the subscribers of M/s. ACL, which was not liable to be paid by the appellant as M/s. ACL had actually rendered the services. Likewise, M/s. ACL had remitted Rs. 1,40,10,900/- as Service Tax for the services actually rendered by the appellant. The amounts due to each other for the value of services as well as Service Tax was settled by raising credit notes. Basing on the credit notes, the appellant and M/s. ACL would net off the amounts payable to the other for arriving at the taxable value for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct to Section 11B of the Central Excise Act, 1944. It was also opined that Rule 6(3) of the Service Tax Rules was consciously crafted for this purpose and it would not be justified to hold that the assessee therein was liable to pay Service Tax on the amounts received in advance when no services were provided. Thus the very same issue in case of the associate company was held in favour of the assessee. The Department has not filed any appeal against the said order and the issue has attained finality. Subsequently, he submitted that there were no further demands issued to M/s. ACL on this count and is deemed to have attained finality in all respects. 4.5.2. The Learned Counsel for the appellant pointed out that the issue that has been decided thus, in favour of the assessee (M/s. ACL), who is their associate company, pertains to one leg of the transaction. The appellant is aggrieved with the present demand for it seeks to levy tax on the other leg of the same transaction on identical allegations. 4.5.3. The Learned Counsel drew support from the decision of the Hon'ble Apex Court in the case of M/s. Birla Corporation Ltd. v. Commissioner of Central Excise [2005 (186) E.L.T. 266....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for certain amounts received from the dealers/distributors, they had not provided any taxable services to the subscribers of 'Aircel' and that since the said gross amounts collected by 'Aircel' are pertaining to the subscribers of 'ACL', the same are passed on to the latter through Credit Notes. 16.3 However, Rule 6(3) of the STR is relating to the refund of the value of the taxable service and the Service Tax thereon to the person from whom it was received. I observe that the gross amounts were passed on to 'ACL' and not to the person, from whom the amounts representing the value of the taxable service and Service Tax thereon was received. As per Rule 6 of the STR, the liability to pay Service Tax arises the moment consideration/payments are received by the service provider towards the value of Taxable Services provided or to be provided. Accordingly, the obligation on 'Aircel' to pay Service Tax arises when they received the consideration towards recharge coupons sold to their dealer/distributors. In view of the above, I find that the instant case falls beyond the scope of Rule 6(3) of the STR and therefore, 'Aircel' had failed to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r makes this clear. So also, there is no dispute that the appellant-company and M/s. ACL have settled between themselves such amount collected along with Service Tax by issuing credit notes to each other. The discussions in paragraph 11 and 13 of the impugned order are reproduced below:- "11. I observe from the records of the case that 'Aircel" and 'ACL' sell recharge cards/coupons to their respective dealers/distributors, which are intended for cross utilization by the subscribers of both the Companies through common recharge platform in order to provide flexibility to the customers. The amount of Service Tax collected from the dealers/distributors, at the time of sale of the recharge cards/coupons, is paid to the credit of the Government Account. When the subscriber activates the recharge card/coupon, service is considered to have been provided and the Income is recognized in the books of the accounts of the respective Companies to which the subscribers belong. The Income in respect of the other Company, inclusive of the Service Tax element contained therein, is passed on through the accounting mechanism of issue of Credit Notes at the end of the Financial Year. .....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orne in mind that the subscriber has received the services which he has paid for. So, the consideration along with tax paid by the customer is in order. Since only one of the companies had provided the service, and the tax was paid by both companies on the same consideration received, they have adjusted the gross amounts by issuing Credit Notes. The Explanation to Section 67 of the Finance Act, 1994 gives the meaning of "gross amount charged". Sub-clause (c) of the Explanation reads as under:- "67. .... Explanation. -For the purposes of this section, - (a) .... (b) .... (c) "gross amount charged" includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and [book adjustment, and any amount credited or debited, as the case may be, to any account, whether called "Suspense account" or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is within any associated enterprise.]" (Emphasis supplied) The assessee having transferred the consideration received from the customer along with tax to the other company who has provided the services....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the value to the person from whom it was received. Rule 6(3) of the Service Tax Rules, 1994 is reproduced below for better appreciation of legal provisions:- Rule 6(3): Where an assessee has paid to the credit of Central Government service tax in respect of a taxable service, which is not so provided by him either wholly or partially for any reason, the assessee may adjust the excess service tax so paid by him (calculated on a pro rata basis) against his service tax liability for the subsequent period, if the assessee has refunded the value of taxable service and the service tax thereon to the person from whom it was received. The literal interpretation of the above Rule means that an assessee can adjust the service tax paid by them against the service tax liability for subsequent period, if only he refunded the amount to the person from whom it was received. At the same time it is pertinent to see that Rule 6 prescribes only the procedure of payment of Service Tax. Whereas under the statute, the power to tax is created by Section 66 of the Finance Act, 1994 and as per Section 68(1) of the Act the Service Tax liability is fastened on the service provider. Further, Section 67 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., reliance is placed on the decision in the case of Nirma Architects & Valuers - 2006 (1) STR 305 (Tri) wherein the Hon'ble Tribunal has held as under:- 5. ...It can be seen from the above that the law makers have specifically provided for the adjustment of excess paid to the short payment. Resorting to a narrow interpretation that such adjustment is possible only if there is a return of Service Tax to the client and relegate the assessee to the rigmarole of refund procedure, would defeat the salutary intention of the law makers. The provisions of Rule 6(3) are for alleviating the difficulties of the assessee than to create hurdle in smooth functioning of imposition and collection of tax. In my opinion, a narrow interpretation as propounded by DR would make the provisions otiose and non-implementable. I find that, in the interest of justice, the adjustment of short payment of service tax of October to December, 1999 by the appellants to the excess payment of October, 1999 to March, 1999 is well within the law and has to be allowed. Reliance is also placed on the following decisions: Sl. No. Appellant Citation 1. SRC Projects Ltd. 2010 (20) STR 687 (Tri.) 2. Powercel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....view was taken in M/s. Boving Fouress Ltd. (supra) wherein the Hon'ble Apex Court has observed as under:- "9. The principle laid down by the Tribunal in Sulzer's case (supra) was accepted by the department and did not challenge the same by filing an appeal in this Court. Thus, the same has attained finality. 10. The Commissioner (Appeals) in its order dated 31st July, 2003 in show cause notices dated 27th September, 1999 and 1st March, 2000 has also recorded a finding that the facts in the Sulzer's case are identical to the facts of the present case. A copy of the decision in Sulzer's case was handed over to the Counsel for the Revenue and he fairly conceded that the facts and the point of law in the said case are identical to that of the present case and therefore covered by that decision. 11. This Court in a catena of decisions has held that where the department accepts the principle laid down by the Tribunal in one case and let it become final, then the department is not entitled to raise the same point in other cases. The department cannot pick and choose. [See: The decisions of this Court in Union of India & Others v. Kaumudini Narayan Dalai & Another - (....