Date of payment of advance receipt will be point of taxation in case of change in effective tax rate
Case Law Details
Mahindra World City (Jaipur) Ltd. Vs Commissioner (CESTAT Delhi)
CESTAT Delhi held that as per rule 4(b)(iii) of the point of Point of Taxation Rules, 2011, in case payment is received before change in effective rate of tax and invoice is issued after change in effective rate of tax, then, point of taxation will be date of payment. Hence, demand set aside on advance receipt.
Facts- The appellant, M/s Mahindra World City (Jaipur) Ltd., has entered into Memorandum of Understanding (MOU) – DTA land on 7.3.2012 to lease land to M/s JCB India Ltd. for setting up a new project for manufacture of earth moving/material handling equipment. Para 2.1 and 2.2 of the said MOU clearly provided that the lease deed shall be executed only after fiscal incentives had been provided by the Government of Rajasthan; failing which the lease deed will not be entered and the amount paid will have to be refunded to the appellant as provided in para 8.1 of MOU.
Thereafter the appellants received Rs. 10,62,33,750/- in March 2012 and the balance amount of Rs. 60,19,91,250/-was received in October, 2012. The lease deed was executed on 23.10.2012. The appellant discharged the service tax of Rs. 7,44,06,119/- and interest of Rs. 23,31,116/- on delay in payment of service tax of Rs. 1,31,31,492/- payable on Rs. 10,62,33,750/- received in March 2012 on 27.11.2012.
The Department initiated investigation and on completion, show cause notice was issued alleging that service tax was payable in March 2012 on the entire amount, and interest on the delayed payment. The show cause notice also alleged that the appellants had collected Rs. 1,45,89,436/- as excess amount. Vide the impugned order-in-original the demand of (i) Rs. 7,29,47,175/- (ii) Rs. 21,88,416/- collected in excess amount of service tax was confirmed and held to be payable under Section 73A and penalty of Rs. 10,000/- under Section 77(2) was imposed.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
