2006 (7) TMI 692 - AT - Service Tax

Summary

Issues Involved:
The issues involved in this case are non-payment of Service Tax for Security Services rendered, imposition of penalties under various sections, applicability of exemption Notification No. 56/98-ST, and the invocation of the extended period for demand of Service Tax.

Non-Payment of Service Tax and Penalties:
The Revenue proceeded against the appellants for not paying Service Tax for Security Services rendered from 16-10-1998 to 30-9-2002. The Adjudicating Authority confirmed a demand of &8377; 19,43,906/- with interest and imposed penalties under Section 75A, Section 76, and Section 78. The Commissioner (Appeals) upheld the duty demand and penalties under Section 75A and Section 76 but set aside the penalty under Section 78 due to lack of prior approval. The appellants challenged this decision.

Applicability of Exemption Notification:
The appellants claimed they were entitled to the benefit of exemption under Notification No. 56/98-ST, dated 7-10-1998. They argued that the Show Cause Notice issued in 2004 for demanding Service Tax from 16-10-1998 to 30-9-2002 was time-barred due to no suppression of facts. The learned Advocate contended that the entire demand is barred by limitation.

Invocation of Extended Period:
The Commissioner (Appeals) initially found merit in the appellants' claim that the demand of the extended period was time-barred. However, a subsequent decision contradicted this finding. The appellants argued that the demands were time-barred based on the Apex Court's decision in Nizam Sugar Factory v. CCE, A.P. The Court agreed that when all relevant facts are known to the authorities, suppression cannot be alleged, and demands are not sustainable. As the Show Cause Notice was issued beyond the normal period, the demands were considered time-barred, leading to the appeal being allowed with consequential relief.

This judgment highlights the importance of adherence to legal procedures, the applicability of exemptions, and the significance of timelines in tax-related matters.