2010 (10) TMI 596 - AT - Service Tax

Demand - Application for stay - Time barred - suppression empowers the Department to invoke extended period of limitation but, at the same time, it is settled law that such power is not to be arbitrarily exercised - As far as the amount subsequent to August, 2004 is concerned, we do not find any prima facie case having been made out except that the appellant would be entitled for credit to the tune of Rs. 2,21,015 - the application is partly allowed and the appellants are directed to deposit a sum of Rs. 6,18,018 Rs. 11,611/- deducting therefrom Rs. 2,21,015

Summary

Issues:
1. Assessment of Service Tax inclusive of Education Cess, interest, and penalty for failure to disclose loading and unloading charges.
2. Challenge against the dismissal of appeal by Commissioner (Appeals) Mangalore.
3. Justification for invoking extended period of limitation.
4. Consideration of partial stay of the impugned order based on the facts and circumstances of the case.

Analysis:
1. The appellants were directed to pay a sum towards Service Tax, inclusive of Education Cess, interest, and penalty for not disclosing loading and unloading charges to determine the value of taxable service. The statement of the appellant's Proprietor clarified that while they had been paying Service Tax and filing returns regularly, loading and unloading charges were not included in the taxable service value. The show-cause notice was issued after a delay of three years without reason, leading to a challenge regarding the suppression of facts and the invocation of an extended period of limitation.

2. The appeal against the Commissioner (Appeals) Mangalore's dismissal did not yield favorable results for the appellants. Despite various grounds for challenging the impugned order, attention was drawn to the delayed show-cause notice issued in 2007 after the appellant's statement in 2004 disclosed the non-inclusion of loading and unloading charges in taxable services. The appellant argued that they had paid the Service Tax for a specific period after including these charges, questioning the justification for invoking the extended period of limitation.

3. The Joint CDR contended that the Department was unaware of the omission of loading and unloading charges in taxable services until 2004, and the notice issued within five years from that point was not time-barred. The debate centered on whether the claim was barred by limitation due to the delayed notice issuance and the subsequent inclusion of the charges in the taxable service value.

4. The Tribunal considered the justification for a partial stay of the impugned order based on the circumstances of the case. While the Department had the power to invoke an extended period of limitation due to suppression of facts, it was emphasized that such power should not be arbitrarily exercised. The Tribunal found that a prima facie case for partial stay existed, directing the appellants to deposit a specific sum within a stipulated period and waiving the remaining demand of tax, interest, and penalty until the appeal's disposal.

In conclusion, the Tribunal partially allowed the application, granting a stay on the demand amount for the period before August 2004 until the appeal's resolution. The decision was based on the consideration of facts, including the appellant's payment of Service Tax post-inclusion of loading and unloading charges, and the lack of justification for invoking the extended period of limitation for the subsequent period.