By TIOL News Service

MUMBAI, AUG 27, 2013: A service tax demand of a princely sum of Rs.20,296/- was confirmed against the appellant on the "Commercial Training or Coaching" services rendered by them during the period July, 2004 to October, 2004. The appellant contested that for the period prior to 10.09.2004, the rate of Service Tax leviable was 8% and w.e.f 10.09.2004, the applicable rate was 10%. Therefore, for the services rendered prior to 10.09.2004, they are liable to pay Service Tax only @8% even though they raised bills after 10.09.2004. This contention of the appellant was rejected and the Service Tax demand was confirmed by the lower authorities.

Before the CESTAT, the appellant submitted -

(i) As per Board's Circular no. 62/11/2003-ST dated 21.08.2003 in para 3.2 thereof, it has been clarified as follows:-

3.2It is a basic principle that no tax can be charged except under authority of law. Thus, if the levy of service tax on a particular service comes into force on a given date, that service will not be taxable if rendered before that date. The levy of service tax on "Maintenance or repair service" has come into force on 1-7-2003. Accordingly any maintenance or repair service rendered prior to 1-7-2003 will not be taxable, irrespective of when the bills are raised or payment made. This will apply to other services as well which were rendered prior to the imposition of service tax on them.

(ii) Rule 6 of the STR, 1994 makes it clear that the receipt of payment for the services rendered is not relevant for determination of the tax and it is the date on which service has been rendered which is relevant and if during the period, the services were not taxable, the same cannot be taxed merely because the payment has been made afterwards. Reliance is placed on the decision in Ashok Kumar Jain, Prop. Vs. CCE, Indore - (2011-TIOL-2008-CESTAT-DEL).

The Bench observed -

"5.1 Service Tax is leviable on the rendering of services. Therefore, it is the rate prevalent on the date of rendering of the service, which is relevant for levy of Service Tax. The Board's instruction (supra) and also the decision of the Tribunal in the case of Ashok Kumar Jain (supra) confirm this view. Recently, the Hon'ble High Court of Delhi in the case of Ratan Singh Builders Pvt. Ltd. - (2013-TIOL-403-HC-DEL-ST) held that the rate that should be applied for levy of Service Tax is the rate prevalent on the date of rendering the services and not the rate applicable on the date of receipt of payment. Following these decisions, which apply to facts of the present case, we allow the appeal with consequential relief, if any, in accordance with law."

(See 2013-TIOL-1273-CESTAT-MUM)