Lotte Engineering & Construction (India) Private Limited Vs Commissioner of Central Excise and Service Tax (CESTAT Chennai)
CESTAT Chennai partly allowed and partly remanded the appeal filed by Lotte Engineering & Construction (India) Private Limited against Order-in-Original No. 41/2012 dated 31.12.2012 concerning Service Tax liability for 2008-09. The Tribunal held that under Rule 6 of the Service Tax Rules, 1994, as applicable during the disputed period, Service Tax was payable in the calendar month in which payments were received. Accordingly, the advance of Rs.37,55,76,899/- was taxable to the extent received during FY 2008-09, subject to verification of refunds and ensuring that the same amount was not taxed again in a subsequent or final tax period. The adjudicating authority was directed to examine these aspects. In contrast, unbilled revenue of Rs.23,75,85,656/-, representing amounts attributable to services already performed but not yet due for payment or invoicing and which had not been received, was held not taxable during the relevant period. The Tribunal further held that the appellant could discharge the tax actually falling due pursuant to its findings by utilizing available CENVAT Credit. The appeal was therefore partly allowed and partly remanded.
Background of the Dispute
Lotte Engineering & Construction (India) Private Limited was engaged in the business of civil construction and had been awarded a contract for construction of a factory building by M/s. Lotte Foods India Pvt. Ltd. (LFI) for Rs.1,78,53,39,880/-. The contract was signed during 2008–09. During audit, the Revenue noticed that the customer was to make an advance payment of 25% of the contract price. The balance sheet for 2008–09 also showed Rs.37,55,76,899/- as current liabilities and provisions under the head “advances from customers”.
