CA Bimal Jain
Service tax demand is raised on Sify Technologies Ltd. (the Appellant) on account of transaction of taxable service with any associated enterprise made in the books of account under suspense account. The Department contended that Explanation (C) to Section 67 of the Finance Act defining the term ‘Gross amount charged’ was amended vide the Finance Act, 2008 to substitute the word “book adjustment” with:
“book adjustment, and any amount credited or debited, as the case may be, to any account, whether called “Suspense account” or by any other name, in the books of account of a person liable to pay Service tax, where the transaction of taxable service is with any associated enterprise”.
In view of above, the Department contended that gross value of taxable service with any associated enterprise in suspense account will be exigible to Service tax retrospectively.
Being aggrieved by the aforesaid demand, the Appellant preferred an appeal before the Hon’ble Tribunal, Chennai contending that amendment made in the definition of the term ‘Gross amount charged’ is prospective and not retrospective.
The Hon’ble CESTAT, Chennai relying upon the decision of the Hon’ble Supreme Court in case Union of India Vs. Martin Lottery Agencies Ltd. [2009 (14) S.T.R. 593 (S.C.)], allowed the appeal in favour of the Appellant and held that:
Therefore, the Hon’ble Tribunal decided the matter in favour of the Appellant by holding that Service tax demand and interest on the gross value of taxable service with any associated enterprises made in the books of account under suspense account relating to the period prior to May 10, 2008 is untenable.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: firstname.lastname@example.org)