Case Law Details
VLCC Health Care Ltd Vs Commissioner of GST & Central Excise (CESTAT Chennai)
Introduction: The case involves VLCC Health Care Ltd, which provides Health & Fitness Services and Beauty Parlour Services. The appellant had collected the entire cost of various packages in advance from clients. Service tax rates were revised from 8% to 12.24%. The dispute arose when the tax department alleged that the appellant should have paid service tax at the enhanced rate for services provided or to be provided after the rate revision.
Analysis: The appellant argued that the circular issued by the Central Board of Excise and Customs (CBEC) on payment of service tax in advance did not apply to their situation. The circular had been withdrawn, and the appellant contended that they were already discharging service tax on the taxable service, with the rate being the only aspect that had changed. They claimed liability for the increased rate only from 18.04.2006, not prior to that.
The Counsel relied on a decision in the case of Vigyan Gurukul v. CCE Jaipur, where the Tribunal had analyzed a similar issue and held that service tax on advance payments received prior to 2011 was liable to be paid on a receipt basis during the relevant period.
The Tribunal referred to relevant provisions, including Section 65(105) of the Finance Act, 1994, and Rule 6 of Service Tax Rules. They concluded that during the relevant time, the rate applicable at the time of receipt of value of service should apply when the assessee chose to pay tax on the advance amount received. The Tribunal also noted the provisions in Rule 4(b)(ii) and Rule 9 of the new Point of Taxation Rules, 2011, which supported their conclusion.
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