Circular No. 158/9/2012-ST dated 08.05.2012 and Circular No.154/5/2012-ST dated 28.03.2012 have been quashed by the Hon'ble High Court of Delhi in W.P.(c) No. 4456/2012 filed by Delhi Chartered Accountants Society (Regd.) and argued by Mr. Ruchir Bhatia, Adv. for Petitioner.
By the aforesaid circulars, service tax authorities were demanding 2% differential service tax on services provided by chartered accountants and other specified professionals for services provided prior to 01.04.2012 but in respect of which payments are received after 01.04.2012.
The said Circular placed reliance on Rule 7 of Point of Taxation Rules, 2011. However, Rule 7 had been substituted and a new Rule 7 had been introduced w.e.f. 01.04.2012 vide the Point of Taxation (Amendment) Rules, 2012.
The contention of the Petitioner was that, reliance in the aforesaid Circulars on Rule 7 of Point of Taxation Rules, 2011 (as it stood prior to 1.4.2012) which had become a dead letter on 1.4.2012 is incorrect and wrong. This is so because omission of a Rule and substitution of new Rule in place results in complete obliteration of the earlier rule. The effect thereof is to obliterate the provision completely from the record of Parliament. In simple words, it never existed. Therefore, after 01.04.2012, reliance if any is to be placed for determining rate of tax then it is to be placed on Rule 4 of Point of Taxation Rules, 2011.
The Hon’ble High Court has been pleased to accept the contention and both the circulars have been quashed.
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