2015 (1) TMI 1200 - AT - Service Tax

Demand of Service Tax - convention services and mandap keeper service - benefit of abatement of 40% of the gross value of the amounts received from the service recipient - Held that - tax liability needs to be confirmed under the category of convention centre services. It is mentioned that the appellant had discharged the Service Tax liability, interest liability will arise on the appellant which needs to be upheld. As regards the penalty imposed by the adjudicating authority and upheld by the first appellate authority, it is to be noted that for the period July, 2001 to September, 2003, the appellant may have had a bona fide assumption that the services would fall under mandap keeper services, we set aside the demand on the ground of limitation; hence, no penalty would arise on the portion of confirmed demand. As regards the demands confirmed, within the period of limitation, as we have held that the issue involved is an interpretation of classification and benefit of Notification No. 21/97-S.T., we hold that there is no reason that warrants, imposing the appellant with penalties. Upholding the tax liability for the period within limitation; and interest thereof, we set aside penalties imposed on appellants. - Decided partly in favour of assessee.

Summary

Issues:
Confirmation of demand of Service Tax liability under the category of "convention services" for the period July 2001 to September 2003.

Analysis:
The case involved a dispute regarding the classification of services rendered by the appellant under the category of convention centre services or mandap keeper services for the period post 16-7-2001. The appellant had been discharging the Service Tax liability under the category of mandap keeper services, availing the benefit of abatement. The Tribunal noted that the new entry of convention centre services introduced post 16-7-2001 covered the services rendered by the appellant. However, the tax liability for the period July 2001 to March 2003 was held to be hit by limitation, as the show cause notice was issued on 4-6-2004, and the appellant had indicated the availment of benefit of Notification No. 21/97-S.T. in their returns.

As for the tax liability for the period April 2001 to September 2003, the Tribunal confirmed the liability under the category of convention centre services. The Tribunal upheld the interest liability on the appellant but set aside the penalty imposed by the adjudicating authority and upheld by the first appellate authority. The Tribunal considered that for the period July 2001 to September 2003, the appellant might have genuinely assumed that the services fell under mandap keeper services, thus setting aside the penalty on the ground of limitation. For demands confirmed within the limitation period, the Tribunal held that no penalties should be imposed, as the issue involved an interpretation of classification and the benefit of Notification No. 21/97-S.T.

The Tribunal disposed of the appeal by upholding the tax liability for the period within limitation and the interest thereof, while setting aside penalties imposed on the appellants. The cross objection filed by the department in support of the first appellate authority's order was also disposed of accordingly.