2016 (6) TMI 1175 - AT - Service Tax

Extended period of limitation - service tax short paid - Held that - No case of any contumacious conduct and/or suppression on the part of the respondent is made out. It is further held that the appellant have rightly paid Service Tax on receipt basis - the SCN is bad and the impugned demand Is not sustainable - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Demand of Service Tax for the period 2007-2010
2. Reduction of penalty and confirmed amount by Commissioner (Appeals)
3. Dropping of demand on certain receipts by Commissioner (Appeals)
4. Allegations of error in dropping demand and reducing penalty by Revenue
5. Violation of principles of Natural Justice in passing ex parte order
6. Tax demanded on accrual basis vs. receipt basis
7. Time-barred demand for the extended period

Analysis:
1. The judgment deals with a case where the appellant, a respondent-assessee, faced a demand for Service Tax amounting to ?15,31,161 for the period 2007-2010. The Revenue alleged a shortfall in tax payment, leading to a show cause notice and subsequent confirmation of the demand along with a penalty under Section 78 of the Act. The appellant contested the demand, leading to an appeal before the Commissioner (Appeals) who partially allowed the appeal, reducing the confirmed amount to ?6,338 and the penalty to the same amount.

2. The Commissioner (Appeals) further reduced the liability by dropping the demand for Service Tax on specific receipts. This included exempting an amount received from an educational body and deducting amounts received from a service receiver during a certain period. The Commissioner also appropriated the Service Tax already deposited by the respondent assessee. The Revenue appealed against these reductions and deductions, citing lack of documentary evidence and errors in the Commissioner's decision.

3. The appellant's representative argued that the original order was in violation of Natural Justice as the reply to the show cause notice was ignored, leading to an ex parte decision. It was contended that there was no suppression of information, as all transactions were duly recorded and disclosed. The appellant also challenged the demand raised on receipts before 2007 and highlighted discrepancies in the application of Service Tax Rules. The appellant maintained that the demand for the extended period was time-barred and emphasized the retrospective amendments in the Finance Act, 2010 regarding the taxation of renting of immovable property services.

4. After considering the arguments from both sides, the judgment concluded that the show cause notice was flawed, and the demand was unsustainable. It was determined that there was no evidence of contumacious conduct or suppression by the respondent. The decision upheld the appellant's payment of Service Tax on a receipt basis and dismissed the Revenue's appeal. The respondent was granted consequential benefits as per the law, and the stay application was disposed of accordingly.