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August 2013

2013 (30) STR. 586 (Del) Commissioner Of Service Tax vs. Consulting Engineering Services (I) Pvt. Ltd.

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 1 mins
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Applicability of rate of service tax prior to introduction of Point of Taxation Rules is the rate in force as on the date of provision of service – receipt of consideration in subsequent period is of no consequence.

Facts:
Services were provided prior to 14-05-2003 and the bills were also raised prior to the said date, which facts were undisputed. However, the payment was received after 14-05-2003 and thus, the revenue sought to levy tax @ 8% as applicable with effect from 14-05-2003, placing reliance on Rule 5B of the Service Tax Rules section 67A of the Finance Act, 1994 and Rule 4(a)(i) of Point of Taxation Rules, 2011.

Held:
The Hon. High Court dismissed the appeal and held that, none of the above provisions were applicable to the facts of the present case as the relevant period was April, 2003 to September, 2003, when these provisions were not in force, In the absence of any rules, the taxable event was the provision of the taxable service which took place prior to 14-05-2003, the rate applicable prior to that date viz. 5% and not 8%.
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