COMMISSIONER OF SERVICE TAX Vs. CONSULTING ENGINEERING SERVICES (I) PVT. LTD.
May, 28th 2013
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 14.01.2013
+ ST.APPL. 76/2012
COMMISSIONER OF SERVICE TAX ... Petitioner
CONSULTING ENGINEERING SERVICES (I)
PVT. LTD. ... Respondent
Advocates who appeared in this case:
For the Petitioner : Mr Rahul Kaushik, Adv.
For the Respondent : Mr M P Devnath, Mr Aditya Bhattacharya, Mr Tarun
Jain, Mr Bhuvnesh Satija and Mr Abhishek Anand,
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE R.V.EASWAR
BADAR DURREZ AHMED, J (ORAL)
We have heard the learned counsel for the parties.
3. With their consent this appeal shall be taken for disposal
straightaway. The question for determination is: -
"Whether, in respect of the services provided prior to
14.05.2003 but, in respect of which payments were received
ST. APPL.76 /2012 Page 1 of 4
on or after 14.05.2003 service tax was chargeable @ 5% or
@8% which rate came into force on 14.05.2003?"
4. The appellant is aggrieved by the order dated 16.03.2012 passed by
the Customs, Excise and Service Tax Appellate Tribunal in Service Tax
Appeal No.424/2008 where this question has been answered in favour of
the assessee and against the department. The Tribunal came to the
conclusion that the rate of service tax would be 5% inasmuch as the
services had been provided prior to 14.05.2003. While doing so, the
Tribunal placed reliance on a decision of the Tribunal, West Zonal
Bench, Ahmadabad in the case of Reliance Industries Ltd. Vs.
Commissioner of Central Excise, Rajkot : 2008 (10) STR 243 (Tri-
Ahmd.). We find that the matter had travelled to the Gujarat High Court
and the Gujarat High Court, itself, in the case of Commissioner of
Central Excise & Customs Vs. Reliance Industries Ltd. : 2010 (19) STR
807 (Guj.) had affirmed the decision of the Ahmadabad Tribunal.
However, this fact had not been brought to the notice of the Tribunal in
the present case. In fact, the matter had travelled even up to the Supreme
Court wherein the Supreme Court did not enter into the question because
the same had become academic in that case. In other words, the Supreme
Court had not expressed any view on this issue. However, the view of the
ST. APPL.76 /2012 Page 2 of 4
Gujarat High Court is clear. The view of the Gujarat High Court is that
the effective rate of service tax would be based on the date on which the
service is provided and not the date of billing.
5. The learned counsel for the appellant submitted that the view taken
by the Gujarat High Court is not binding on this Court and based upon
this submission he sought to place reliance on Rule 5B of the Service Tax
Rules, 1994. He also placed reliance on Rule 4(a)(i) of the Point of
Taxation Rules, 2011 as also Section 67A of the Finance Act, 1994.
6. However, we find that none of these provisions are applicable in
the facts and circumstances of the present case as Rule 5B of the Service
Tax Rules, 1994 came into effect on 01.04.2011 and was out of the
statute books on 01.07.2012. Section 67A of the Finance Act, 1994, was
inserted in the said Act by virtue of the Finance Act, 2012 w.e.f.
28.05.2012. In the present case, the relevant period is April, 2003 to
September, 2003. Therefore, none of the above provisions apply.
Moreover, even Rule 4(a)(i) of the Point of Taxation Rules 2011 is not
applicable because those Rules came into effect on 01.03.2011.
7. In the absence of any Rules, we will have to examine as to what is
the taxable event. The taxable event as per the Finance Act, 1994 is the
ST. APPL.76 /2012 Page 3 of 4
providing of the taxable service. In the present case, we find that not only
were the services admittedly provided prior of 14.05.2003 but also the
bills have been raised prior to 14.05.2003. The only thing that happened
after 14.05.2003 was that the payments were received after that date.
That, in our view would not change the date on which the taxable event
had taken place. Since the taxable event in the present case took place
prior to 14.05.2003, the rate of tax applicable prior to that date would be
the one that would apply. In the present case, the rate of 5% would be
applicable and not the rate of 8%. Consequently, we answer the question
in favour of the respondent and against the appellant.
The appeal is dismissed.
BADAR DURREZ AHMED, J
JANUARY 14, 2013
ST. APPL.76 /2012 Page 4 of 4