2015 (7) TMI 1152 - AT - Service Tax

Demand of service tax - section 73(1) read with Section 75 of the Finance Act, 1994 - Rent-A-Cab Scheme Operator - invocation of extended period of limitation - element of fraud, collision, suppression of facts, etc - Held that - I find that since the Id. Commissioner (Appeals) has dropped the penalty holding that there is no wilful default in non-payment of service tax, it is not proper in upholding the demand on limitation ground in as much as the ingredients such as fraud, wilful mis-statement, suppression of facts, etc. are common in both the statutory provisions, i.e., proviso to Section 73 as also in Section 78 ibid. The extended period of limitation cannot be invoked for confirmation of service tax liability and the liability should be confined to the period of one year from the date of issue of Show Cause Notice. Therefore, by setting aside the impugned order, the matter is remanded to the original adjudicating authority for ascertaining the normal limitation period and to confirm the service tax liability, if any, within such period of limitation - appeal disposed off - matter remanded.

Summary

Issues:
Non-payment of service tax on 'Rent-A-Cab Scheme Operator Service' from 2007-08 to 2010-11; invocation of extended period in Show Cause Notice for demand confirmation; imposition of penalty under Sections 76, 77, and 78 of the Finance Act, 1994; applicability of limitation period for service tax liability confirmation.

Analysis:
The case involved a dispute regarding the non-payment of service tax by the appellant on the 'Rent-A-Cab Scheme Operator Service' provided during the period from 2007-08 to 2010-11. The service tax Department confirmed a demand of Rs. 28,10,840/- along with interest and penalty based on the definition of taxable service. The Commissioner (Appeals) later reduced the service tax liability to Rs. 5,22,616/- and waived the penalty imposed under Sections 76, 77, and 78 of the Finance Act, 1994.

The appellant contended that the extended period mentioned in the Show Cause Notice should not apply for demand confirmation as there was no evidence of fraud, collusion, or suppression of facts to defraud the government revenue. The Commissioner (Appeals) found no wilful default on the part of the appellant in non-payment of service tax and set aside the penalty, citing inadvertent non-payment and lack of evidence for wilful misstatement or suppression of facts.

The tribunal noted that since the penalty was dropped due to the absence of wilful default in non-payment of service tax, invoking the extended period for limitation grounds was not justified. The tribunal opined that the ingredients for invoking the extended period were common in both the proviso to Section 73 and Section 78 of the Finance Act, 1994. Therefore, the extended period of limitation could not be invoked, and the liability should be determined within the normal limitation period of one year from the date of the Show Cause Notice.

Consequently, the tribunal set aside the impugned order and remanded the matter to the original adjudicating authority to ascertain the normal limitation period and confirm any service tax liability within that period. The appeal was disposed of by way of remand, with the operative portion pronounced in open court.