TaxTMI 
TaxTMI 
2026 (3) TMI 1149
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....was noticed that they had received an amount of Rs.76,27,10,041/- for the year 2012-13 towards ship repair service which alleged to attract service tax under the category of Management, Maintenance or Repair service; whereas the amount shown in the ST-3 returns under the head Management, Maintenance or Repair service was only Rs.71,97,15,372/-. Consequently, a demand notice was issued to the respondent. Similarly for the financial year 2013-14 and 2014-15, differences were noticed as per their financial documents and the value declared in ST-3 returns. Consequently, show-cause notice dated 21.03.2016 was issued for recovery of differential service tax amounting to Rs.4,14,49,507/- for the period 2012-13 to 2014-15 under the head Management, Maintenance or Repair service. Also, an amount of Rs.4,72,48,186/- short-paid due to adoption of lesser value for the period 2012-13 to 2014-2015; and also ineligible cenvat credit of Rs.14,52,66,531/- proposed to be recovered with interest and penalty. On adjudication, the learned Commissioner dropped the proceedings. Hence, Revenue is in appeal. 3. Reiterating the grounds of appeal, the learned Authorised Representative (AR) for the Revenue....
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....: "13. Now I may venture into the issue of difference in the income from ship repair services as per Financial Statements and that declared in the ST-3 returns. The assesse has contended that the difference is on account of two factors such as (i) the inclusion of material portion in the financial statements, which is not forming part of the taxable value declared in the ST-3 returns(ii) Proportionate income accounted on a notional basis with regard to services which have not been completed but recognised in accounts as per the accounting Standards AS7, where no invoice has been raised since the service is not completed. 14. I find that the assessee has excluded the material portion of repair activity being the transfer of property in goods, during the course of execution of repair from the taxable value, while determining service tax liability. Prior to 01.07.2012, as per Notification no. 12/2003-ST dated 20.6.2003 exempted so much value of all taxable services as was equal to the value of goods and materials sold by the service provider to the service recipient subject to the conditions that there is documentary proof of such value of goods and material....
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....tinuous supply of service was given under Rule 6 of The Point of Taxation Rules, 2011. But Rule 6 was omitted (w.e.f.01.04.2012) by Notification No.4/2012-ST dated 17.3.2012. However the explanation to Rule 6 has been shifted as proviso to Rule 3(b) of the Rules, by Notification No.4/2012-ST dated 17.3.2012. Continuous Supply of service (as per Rule 2(c) of POT Rules) means any service which is provided, or agreed to be provided continuously or on recurrent basis, under a contract, for a period exceeding three months with the obligation for payment periodically or from time to time. As per proviso to Rule 3(b) of POT Rules, where the provision of the whole or part of service is determined periodically on the completion of an event in terms of a contract, which requires the service receiver to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed the date of completion of the provision of service. The Board vide circular No. 144/13/2011-ST dated 18.07.2011 had clarified that it is important to identify the completion of the service as the value of the services are required to be mentioned in the invoice. It was a....
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....-------- Total as per Financial Documents - Rs.76,27,10,041 Value of taxable Services after excluding the cost of materials involved - Rs. 71,97 15,372 Value as declared in the ST-3 returns- Rs. 71,97,15,372/- (No difference) 2013-14 Turn over as per Financial accounts- Rs 62,11,23,834/- Value of taxable Services after excluding the cost of materials involved - Rs.47,21,88,942 Value as declared in the ST-3 returns- Rs 47,21,88,943/- (No difference) 2014-15 Turn over as per Financial accounts- Rs.61,88,84,971/- Value of taxable Services after excluding the cost of materials involved - Rs 49,20,94,782 Less value on advance receipts for which ST paid in 2013-14 - Rs. 1,66,32,241/- [49,20,94,782 - 1,66,32,241 = 47,54,62.541/-] + Other Works (Rs. 1378000) = Rs.47,68,40,541/- Value as declared in the ST-3 returns- Rs.47,68,40,533/- (No difference) As the difference in value as per P& L accounts and that in the ST-3 returns which is attributed to non inclusion of materials sold and the notional income recognised on services pending completion for which no invoices would be ....