BPL LTD. Vs. COMMISSIONER OF SERVICE TAX, BANGALORE

JUDGEMENT

(1.) THIS appeal arises from OIO No. 4/05 dated 15 -11 -05 confirming demands of Service Tax and imposing penalties. The appellants had rendered consultancy engineering services to their clients M/s. B.S. Refrigerators and M/s. B.S. Appliances. They have raised debit notes for the value of services including the service tax therein. However, the said value of services including the service tax was not realized by them. Therefore they had kept demanding the same from their clients without avail. Ultimately they had reflected these dues under the heading sundry debtors. The department did not accept their plea that in terms of Rule 6 of the Service Tax rules read with Section 68 of the Finance Act 1994, the liability would not arise unless they have received the payments towards the value of taxable services. The Commissioner also did not accept the plea of limitation on the ground that the demands are barred by time. It was pleaded that the assessee had taken the registration on 6 -9 -2000 and had been filing the returns regularly and therefore, the show cause notice issued on 2 -7 -04 for the disputed period 2002 is barred by time. They had referred to returns filed in April 2003. They also relied on the judgment of the Tribunal rendered in the case of Anand Nishikawa Co. Ltd. v. CCE, Meerut, 2005 (188) E.L.T. 149 (S.C.) wherein it has been clearly laid down by the Apex Court that when the facts are not suppressed then the demands would be barred by time.

(2.) WE have heard both sides in the matter and have perused the records. T. Velu Pillai and Co., Chartered Accountants have issued certificate based on the verification of books of accounts of the appellant company, that till date the appellant did not receive payments towards the debit notes raised for various engineering services provided to M/s. B.S. Refrigerators Ltd., and M/s B.S. Appliance Ltd., Bangalore. The appellants had been filing returns regularly and informing the department about the outstanding debit notes due to them. There is no dispute about this fact about the appellants not having received the services amounts including the tax from their customers and they had reflected these amounts under the heading sundry debtors. Section 68 of the Finance Act 1994 and Rule 6 of the Service Tax Rules does not permit recovery of the tax unless the payments are received. Both the Section 68 and Rule 6(1) are reproduced herein below: - Section 68. Payment of service tax - (1) Every person providing taxable service to any person shall pay service tax at the rate specified in Section 66 in such manner and within such period as may be prescribed. (2) Notwithstanding anything contained in sub -section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service. RULE 6 (1) Payment of service tax. - The service tax shall be paid to the credit of the Central Government by the 5th of the month immediately following the calendar month in which the payments are received, towards the value of taxable services: The Tribunal has granted full stay by Stay Order No. 334/06 dated 24 -3 -06, in view of the fact that appellants have not received value of taxable services from their customers in terms of Section 68 and Rule 6(1) of Service Tax Rules. The service tax is not liable to be paid as the assessee has not received the payments towards the value of taxable service. The appellants have been filing returns and informing the department about the non -receipt of the value of services rendered by their customers and about the nonpayment of the same. The department is aware of these facts as the returns have been filed. Therefore, the issue of show cause notice beyond the period of one year is barred by time. For the reasons stated above, the appeal is thus allowed with consequential relief if any.