2010 (11) TMI 384 - AT - Service Tax

Demand - Limitation - Not filed any monthly return of service tax - Investigations were carried out from the recipient of the service and Revenue came to know that Respondents is providing taxable service i.e. security agency service - The Show Cause Notice was issued only on the ground that the respondents are not filing any returns therefore it cannot be said that Show Cause Notice is hit by limitation as there is a clear suppression of fact with intent to evade payment of duty - Therefore the demand raised in the Show Cause Notice is time barred are not sustainable hence set aside. Tthe demand is even beyond the five years during argument respondents admitted that payments were received for the period and for the subsequent period the payment was received - This issue was not raised before the adjudicating authority nor before the Commissioner (Appeals) - The issue requires verification - Therefore the matter is remanded to the adjudicating authority.

Summary

Issues:
- Appeal against the demand of Service Tax and penalties on the ground of limitation.
- Whether the Show Cause Notices were time-barred.
- Whether there was suppression of fact with intent to evade payment of duty.
- Whether the demand was beyond the five-year period.

Analysis:

The Appellate Tribunal heard an appeal filed by the Revenue against the impugned order setting aside the demand of Service Tax and penalties amounting to Rs. 65,207. The case involved the provision of security agency services by the Respondents, which became liable for Service Tax from October 16, 1998. The Revenue issued a Show Cause Notice in 2004 as the Respondents had not filed monthly returns from October 1998 to August 2001. Subsequently, another Show Cause Notice was issued in 2006 based on evidence collected from a recipient of the service, demanding Service Tax. The Commissioner (Appeals) set aside the demand citing limitation as the first Show Cause Notice was issued in 2004.

The Revenue contended that the first Show Cause Notice was for not filing returns, and the second was based on information from the service recipient, alleging suppression of facts to evade duty payment. The Respondents argued relying on lower authority findings and raised concerns about the demand period exceeding five years. The Tribunal noted that the first Show Cause Notice was issued due to non-filing of returns, and upon discovering the taxable service provided by the Respondents, a second Notice was issued alleging suppression. The Tribunal found the Commissioner (Appeals)'s decision on limitation unsustainable and set it aside.

An additional issue arose regarding the demand exceeding five years, which was not raised before the Commissioner (Appeals). The Respondents admitted to receiving payments in 2001 and beyond, with a Show Cause Notice issued in 2006. As this issue was not addressed earlier, the Tribunal remanded the matter to the adjudicating authority for verification and quantification of the demand beyond the five-year period. The adjudicating authority was instructed to decide on quantification and penalties after providing an opportunity of hearing to the Respondents. Cross Objection was also disposed of during the proceedings.