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Judgment
D.A. Mehta, J.—The appellant-revenue has challenged order dated 3-8-2007 made by Customs, Excise & Service Tax Appellate Tribunal (CESTAT) by proposing the following two questions:
I. Whether or not, in Service Tax, the taxable event is realization of payment for taxable services rendered and not the time of rendering of the taxable service?
II. Whether or not, at the time of realization of payment for the taxable service provided, the provisions of Rule 2(1)(d)(iv) had come into force, making the service receiver liable for payment of service tax in respect of taxable services provided by a non-resident or a person who is from outside India and who does not have any office/establishment in India?
Heard learned advocate for the appellant. It was submitted that the impugned order dated 3-8-2007 made by CESTAT overlooks the fact that by virtue of amendment of relevant Rule of the Service Tax Rules, 1994 (the Rules) the liability to pay Service Tax has been shifted to the recipient of the service w.e.f. 16-8-2002 by virtue of Rule 2(1)(d)(iv) of the Rules. Nun in the circumstances, the respondent-assessee was required to pay the Service Tax on the services received from a sister company located in Germany.
CESTAT has found that admittedly, the services were received by respondent between November, 2001 and March, 2002 while the invoice has been raised and settled in September, 2003. It is also an accepted position that at the point of time when the services were rendered by the service provider and received by the respondent the liability was not cast on the recipient of the services. The liability to pay Service Tax has been cast on the recipient of the service only w.e.f. 16-8-2002.
The Service Tax, which has been imposed by way of Finance Act, 1994 (the Act), levies Service Tax as provided in Section 64(3) of the Act to all taxable services provided on or after commencement of Chapter 97 (sic)(Chapter V) of the Act. Thus, the taxable event is providing all taxable services which has been defined by Section 65(105) of the Act. Similarly, the Rules, which have been incorporated as Chapter 98 (sic) define "person liable for paying the service tax" under Rule 2(d) to mean in Clause (iv), in relation to any taxable services provided by a person who is a non-resident or is from outside India, does not have any office in India, the person receiving taxable service in India. The taxable event in relation to Service Tax is admittedly the rendering of taxable service. The said taxable services were rendered between November, 2001 and March, 2002. In the circumstances, merely because the invoice is raised and payment made subsequently viz. after 16-5-2002 the liability cannot be fastened on the recipient of the services as the taxable event had already occurred paste (sic) and raising of invoices and/or making of payment cannot be considered to be a taxable event. Nor is it possible to hold that the provision of Rule 2(1)(d)(iv) of the Rules is retrospectively applicable to services rendered prior to 16-8-2002. Thus, neither the Section nor the Rule even suggest that the taxable event is the raising of an invoice for making of payment. It is well settled in law that a taxing statute has to be read and plain meaning assigned to the provisions without importing any extraneous consideration on a presumption.
The Tribunal has decided the matter in accordance with law and based on the facts and material available on record. In absence of any legal infirmity in the impugned order of the Tribunal, no interference is called for.
Accordingly, in absence of any substantial question of law, the appeal is dismissed.