2011 (8) TMI 418 - AT - Service Tax

Demand - Services of commissioning and installation - there is no evidence of positive act of suppression against the appellants - It is well settled law that mere non-filing of information to the Revenue on the reasonable belief that the activities undertaken by them are not taxable, cannot be held to be a justifiable ground for invokation of longer period of limitation - Apart from the above, we also taken into consideration the fact that the appellants have made a submission that the earlier show cause notice was issued to the appellants on 2.11.2007 for the same period on the basis of audit conducted by the department and all requisite information and records were submitted to them - In any case, in the absence of any positive act of suppression or mis-statement with malafide intention, we are of the view that demand beyond the normal period of limitation is not liable to sustain - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of service tax against the appellant for commissioning and installation services.
2. Imposition of penalties under various Sections of the Finance Act 1994.
3. Invocation of longer period of limitation for raising demands of service tax.

Analysis:
1. The judgment addresses the demand of service tax amounting to Rs.2,71,103/- against the appellant for providing commissioning and installation services while constructing a petrol pump. The appellant argued that they had only undertaken civil construction work and had not installed or commissioned any plant, machinery, or equipment. The adjudicating authority found that the appellant had indeed completed the work required for pre-commissioning of the petrol pump, but it was not equivalent to commissioning and installation services as defined under section 65(28) of the Finance Act, 1994. Therefore, the confirmation of service tax was deemed unjustified and unwarranted.

2. In addition to the service tax demand, penalties under various Sections of the Finance Act 1994 were imposed on the appellants. However, the judgment focused on the main issue of service tax liability and the incorrect categorization of the appellant's services as commissioning and installation, leading to the conclusion that the penalties were not discussed in detail.

3. The judgment also delved into the invocation of the longer period of limitation for raising demands of service tax against the appellant. It was noted that the extended period of limitation was justified by the lower authorities due to the appellant's failure to inform the revenue about the services provided to Reliance Engineering Associates, which came to light during an audit. However, the tribunal found no evidence of a positive act of suppression by the appellants. It was emphasized that mere non-filing of information to the Revenue, based on a reasonable belief of non-taxability, was not sufficient grounds for invoking the longer period of limitation. Ultimately, in the absence of any malafide intention or suppression, the demand beyond the normal period of limitation was deemed unsustainable, leading to the setting aside of the impugned order and granting relief to the appellant.