2017 (3) TMI 1605 - HC - Service Tax

Extended period of limitation - Cargo Handling Service - Held that - The question as to whether the cargo handling contract given to the assessee by M/s. Manganese Ore India Limited fell within the definition of Section 65(23) of the Finance Act, 1994 itself was subject matter of bona fide interpretation - Since the levy itself was subject matter of interpretation, it cannot be said that the assessee had any intention to evade payment of service tax which alone would entitle the Revenue to apply the extended period to recover the service tax - appeal dismissed.

Summary

Issues:
1. Whether the extended period of limitation should be invoked for recovery of service tax.
2. Whether the assessee is entitled to exoneration from the extended period of limitation due to non-wilful supply of information.

Analysis:
1. The appeal under Section 35G of the Central Excise Act, 1944 arose from an order by the CESTAT regarding the recovery of service tax for transport activity. The Revenue contended that the extended period of limitation should have been invoked by the Commissioner to recover the service tax. The CESTAT upheld the decision against the Revenue, stating that the cargo handling activity was subject to interpretation, hence the extended period was not applicable.

2. The Finance Act, 1994 allows a period of twelve months for service tax recovery, but if the tax remains unpaid due to contravention, a five-year period applies. The Revenue argued for invoking the extended period since the service tax was not paid. However, the assessee cited a Supreme Court judgment stating that non-furnishing or suppression of information is not a substantial legal question. The assessee's interpretation of the cargo handling contract with M/s. Manganese Ore India Limited was considered bona fide, indicating no intention to evade tax, thus not warranting the extended period.

3. The Court found that the interpretation of the cargo handling contract was genuine and not an attempt to avoid service tax payment. As there were no substantial legal questions involved, the appeal was dismissed. The judgment highlighted the importance of intention to evade tax for invoking the extended period of limitation, which was not established in this case.