The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the Sum forming part of “gross amount charged” taxable in subsequent period.
It is the case of the assessee that it is engaged in the business of civil construction, it was awarded a contract for construction of factory building by M/s. Lotte Foods India Pvt. Ltd. [hereinafter referred to as ‘LFI’] for Rs.1,78,53,39,880/-. The said contract was signed during the year 2008–09. During the course of audit of the accounts of the assessee by the Internal Audit Group, the audit team appears to have noticed the said agreement and the fact that the customer of the assessee was to make an advance payment of 25% of the contract price.
It is the further case of the Revenue that, from the financial statements like balance sheet and Profit & Loss account for the year 2008–09, at Schedule 8 of the Balance Sheet, an amount of Rs.37,55,76,899/- was shown as current liabilities and provisions – advances from customers.
The Revenue contended that clause (c) in the Explanation to Section 67 defines “gross amount charged” to include, inter alia, “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”.
A Two-Member Bench of the Tribunal comprising M Ajit Kumar, Technical Member and P Dinesha, Judicial Member observed that “Much emphasis has been laid on the position that the appellant and its customer are related i.e., ‘associated enterprises’ within the meaning of the above Explanation. The reason this is of no relevance is that Section 67(3) read with the aforesaid Explanation operates to define what falls within consideration or “gross amount charged”.
“In the facts of the case at hand, it is nobody’s case that the unbilled revenue does not constitute consideration for services rendered or that it does not form a part of the “gross amount charged”. The limited scope of the dispute is whether that sum, although forming a part of “gross amount charged”, can be taxable in this tax period as contended by the Revenue, or in a subsequent period as contended by the appellant. This question we have already answered above and hence, Section 67 or the Explanation thereunder would not disturb our reasoning” the Bench concluded.
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