Case Law Details
Gammon India Ltd Vs CST (CESTAT Mumbai)
The Mumbai CESTAT, in Gammon India Ltd Vs. CST held that demand on Mobilization advance is not consistent with law and deserves to be set aside. Proviso to Section 2(31) of the CGST Act 2017 provides that deposits shall not be considered as payment made unless the supplier applies such deposit as consideration. Thereby mobilization advance can be a deposit, and GST to be paid only on adjustment against the Bill.
FULL TEXT OF THE CESTAT JUDGEMENT
This appeal of M/s Gammon India Ltd, against order-in-original no. 31/STC-V/SKD/16-17 dated 9th August 2016 of Commissioner of Service Tax-V, Mumbai, challenges the confirmation of liability of ₹ 24,46,94,906 demanded under section 73 of Finance Act, 1994, with applicable interest under section 75 of Finance Act, 1994, and the imposition of penalty of like amount under section 78 of Finance Act, 1994 and of ₹ 10,000 under section 77 of Finance Act, 1994. The dispute concerns the stage – on receipt or on issue of the bill – at which ‘mobilization advance’ paid to the appellant is leviable to tax.
2. The demand is founded on the factual matrix of ‘mobilization advance’ having been received by the appellant in pursuance of contracts entered into with recipients of services rendered by them applied to the legal framework established by amendments to section 67 of Finance Act, 1994 in 2005, 2006 and 2008, the clarification issued in circular no. BI/6/2005-TRU dated 27th July 2005 of Central Board of Excise & Customs (CBEC) and taxability of ‘works contract service’ so rendered with effect from 1st June 2007, by the newly incorporated section 65(105) (zzza) of Finance Act, 1994, which, according to the adjudicating authority, overcomes the strenuous defence put forth by the noticee.
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