M/S Punjab National Bank vs C.C.E., Allahabad

(Arising out of the Order-in-Revision No. (ST-86/09)09 of 2010 dated 15/02/2010 passed by the Commissioner, Customs & Central Excise, Allahabad).

For approval and signature:

Honble Mr. Justice G. Raghuram, President

Honble Mr. H.K. Thakur, Technical Member

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s Punjab National Bank . Appellant

vs.

C.C.E., Allahabad . Respondent

Appearance:

None - for the appellant

Shri R.K. Grover, A.R. for the Respondent/Revenue

Coram: Honble Mr. Justice G. Raghuram, President

Honble Mr. H.K. Thakur, Technical Member

Final Order No. 52198/2015 dated 09/07/2015

Per. H.K. Thakur :-

This appeal has been filed by the appellant with respect to Order-in-Review No. (ST-86/09)09 of 2010 dated 15/02/2010 under which Reviewing Authority has confirmed demand of Rs. 7,49,697/- against the appellant, alongwith interest, and an equivalent amount of penalty has also been imposed upon the appellant under Section 78 of the Finance Act, 1994. The issue involved is whether service tax was required to be paid @ 8% when services were rendered or @ 10.2% when the bill for the service rendered was raised by the appellant.

2. None appeared on behalf of the appellant. There is also no request for any adjournment.

3. Shri R.K. Grover (AR) appearing on behalf of the Revenue strongly defended the orders passed by the Reviewing Authority to argue that the rate of duty prevailing on the date of billing has to be taken into consideration while making payment of service tax.

4. Heard learned AR and perused the case records. It is well accepted principle that rate of service tax prevailing on the date of rendering of service will be the appropriate rate for payment of service tax except in the case of reverse charge mechanism where service tax is required to be paid on the date of receiving of bill for the services rendered. This view is fortified by the case law of Reliance Industries Ltd. vs. CCE, Rajkot reported in (2008) 15 STT 29 (AHD.  CESTAT). In para 6.2, 6.3 and 7 of this case law, CESTAT Ahmedabad held as follows :-

6.2 In Central Excise also, the duty on clearances for any month (other than March) becomes payable within a few days in the following month.

The rate of duty is what is applicable on the date of clearance, and not on the date of payment.

6.3 Further, relevant portion of the Boards clarification which has a bearing on the rate of duty is reproduced below :-

5. A further question raised is relating to payments receivable in foreign exchange for the services performed prior to 01/3/2003 when the rate of service tax applicable was 5 per cent but payments are received after 01/3/2003. the enhancement of the rate of service tax from 5 per cent to 8 per cent would be applicable only when the Finance Bill is passed. If payments are received in the aforesaid case after the Finance Bill is passed, the rate of tax applicable would be 5 per cent so long as the billing has been made prior to the date of passing of the Finance Bill. If the billing is made subsequent to the date of passing of the Finance Bill, the service tax would be applicable at the enhanced rate of 8 per cent.

7. The above clarification of the Board cannot be considered to be authorizing the application of rate prevailing at the time of billing/ payment. The linking of the rate of duty to the one prevailing on the date of billing or date of payment is not legally justified.

5. In view of the above observations, appeal filed by the appellant is allowed.

(Operative part of the order pronounced in the open court.)

andl

(Justice G. Raghuram)

President

(H.K. Thakur)

Technical Member

PK

??

??

??

??

2