ANCHOR AGENCIES (P) LTD. Vs. CCE

JUDGEMENT

(1.) THIS appeal by the assessee is directed against the order of Commissioner (Appeals) dated 12.01.2007 upholding the adjudication order of the Joint Commissioner dated 04.10.2006. By the said order, the Joint Commissioner held that the appellant is liable to pay Service Tax amounting to Rs. 6,39,734/ - and Education Cess amounting to Rs. 5,497/ - for the period April, 2002 to September, 2005. Penalties @ 100/ - per day under Section 76; Rs. 1000/ - under Section 77 and Rs. 6,45,231/ - (the amount equal to the Service Tax and the Education Cess) under Section 78 were also imposed. The appellant was also directed to pay interest at the appropriate rate on delayed payment of Service Tax in terms of Section 75 of the Act.

(2.) THE appellant is a clearing and forwarding agent (hereinafter referred to as 'C&F Agent') within the meaning of Clause (25) of Section 65 of the Finance Act, 1994 (hereinafter referred to as 'Act'). It is not in dispute that the services provided by a C&F Agent is a 'taxable service' within the meaning of Sub -clause (j) of Clause (105) of Section 65 of the Act. The appellant, indeed, does not deny its liability to pay Service Tax. The case of the appellant is that the tax is to be paid only on receipt of payments for the taxable service provided to the recipients, and presently it was not paid on account of nonpayment of the bills in respect of the services provided to two of its clients, namely, TISCO and the Tinplate Company of India Ltd. The authorities found that the balance sheet for the relevant years showed that the appellant had received Rs. 45,80,544/ - as commission and handling charges on which the service tax of Rs. 2,88,630/ - was payable. Similarly for the period 01.04.2004 to 30.09.2005 the taxable value shown in the ST -3 return was Rs. 37,01,566/ - on which Service Tax of Rs. 3,51,104/ - was payable.

(3.) IT was submitted on behalf of the appellant that the Company follows the mercantile system of accounting and in terms of Section 209(3)(b) of the Companies Act, 1956, where books of accounts are maintained on accrual basis, it is to be presumed that books of accounts are properly maintained with respect to matters specified in Sub -sections (1) and (2) of Section 209. It was accordingly submitted that the entries in the books of accounts with respect to alleged receipt of commission and handling charges could not lead to the inference that payment had been received. The entry merely meant that the payment had accrued to the appellant from TISCO and the Tinplate Company of India Ltd. It was submitted that unless payment is actually received by the service provider, there is no occasion for making payment of Service Tax in terms of Rule 6(1) of the Service Tax Rules, 1994.