Service tax liability depends on the service-rendering date, not subsequent receipt of commission.

The appellant received commission for arranging the transfer of a DFRC licence from M/s Patton Limited to M/s POS-Hyundai Steel Manufacturing (India) Pvt. Ltd.

The Tribunal identified four debit notes, dated 27 April to 26 June 2004, for those services.

The department issued a show-cause notice demanding service tax of ₹4,79,087 on commission of ₹59,88,590, on the basis that the commission was received during 9 July 2004 to 31 March 2005.

The demand, interest and equal penalty were confirmed in the impugned order.

The appellant challenged that order, contending that the services had been rendered before 9 July 2004.

1. Whether commission received after 9 July 2004 was liable to service tax when the underlying commission-agent services had been rendered before that date.

2. Whether the service-tax demand, interest and penalty could be sustained on the basis of the post-9 July 2004 receipt of commission.

The Tribunal considered the service-tax framework under Section 66(2) of the Finance Act, 1994, Notification No. 13/2003-ST dated 20 June 2003, and Notification No. 8/2004-ST dated 9 July 2004, which it identified as relevant to the tax treatment of commission-agent services.

It held that, for determining liability in this case, the relevant date was when the service was rendered, not when payment was received; commission received after 9 July 2004 did not attract service tax where the service itself had been rendered before that date.

The debit notes established that the services were provided between April and June 2004, before 9 July 2004.

The Tribunal therefore rejected the adjudicating authority’s reliance on the later receipt of the commission.

Because the services were rendered before the relevant change in tax treatment, subsequent payment did not make the commission taxable; accordingly, the demand and its consequential interest and penalty were unsustainable.

It set aside the impugned order and allowed the appeal, with consequential relief in accordance with law.