- Service provider can opt to pay service tax on works contract on gross amount and take credit on input/input service (CST.,Vapivs S.V. Jiwani 2016(42) S.T.R. 209 (Bom.)
- Background: Assessee engaged in rendering works contract service, paid service tax on gross amount without availing the option provided under Rule 2A of ST (Determination of Value) Rules, 2006 and taken credit on input/input service. Department alleged that tax needs to be paid under Rule 2A and assessee not entitled to credit of input/input service. Tribunal had held that credit may be taken.
- Issue: Whether service tax on works contract may be paid on gross amount (with credit) instead of at abated rate as provided under Rule 2A of Valuation Rules?
- Decision: The High Court did not go into substantive provision of law and held that revenue is not at loss when the credit has been availed after paying tax on gross amount. Revenue’s appeal against Tribunal order allowing credit to assessee, not entertained.
Comment: Though High Court had not gone into substantive provision of law, yet in view of the author, the judgment of Tribunal holding that exercise of option under Rule 2A of Valuation Rules is not mandatory is correct position of law. Assessee may choose topay service tax on gross amount with credit on input/input service.
- Attachment and recovery of service tax demand from bank account of a company as against the dues recoverable from a proprietorship concern is illegal and impermissible(Atchaya Engineering Pvt Ltd VsAddl Commissioner 2016TIOL-662-HC-MAD-ST)
- Background: The director of the petitioner company is the proprietor of M/s Atchaya Enterprises. The department demanded service tax from M/s Atchaya Enterprises and attached the bank account of the petitioner company.
- Issue: Can the bank account of another entity be attached for the dues of some other entity?
- Decision: When the petitioner company is a separate and independent entity, the bank account of the petitioner company cannot be attached for the dues of the proprietorship concern, viz., M/s. Atchaya Enterprises. The attachment in respect of the petitioner company stands raised.
- Penalty under section 76 and 78 are mutually exclusive. (Raval Trading Company vs CST- 2016 (42) STR 210 (Guj)
Background: Assessee did not pay service tax on business auxiliary service. Tribunal confirmed tax, interest and penalty u/s 76 and 78. Assessee contended that proviso inserted u/s 78 that no penalty shall be imposed u/s 76 when imposed u/s 78 is clarificatory in nature.
Issue: Whether penalty under section 76 and 78 can be imposed simultaneously?
Decision: Held that section 76 would cover cases other than arising on account of fraud, evasion etc. for which separate penalty has been provided u/s 78. Proviso to section 78 made it explicit which was till then implicit. Penalty cannot be imposed u/s 76 when confirmed u/s 78.
ADVANCE RULING
- Only Expenditure/costs incurred by foreign C&F agent as a pure agent to be excluded from gross amount for charging ST (Berco Undercarriages India Pvt Ltd Vs CC, CE & ST 2016-TIOL-11-ARA-ST)
- Background:Foreign C&F Agent is located outside India and the applicant, who is rec