2010 (9) TMI 871 - HC - Service Tax

Commercial concern versus non profit concern - Whether the learned Tribunal is justified in rejecting the appellant s contention that the appellant is not a commercial concern and therefore does not fall within the scope of the definition of the term security agency as defined in Section 65(40) of the Finance Act, 1994 - appellant applied for registration under the Act and was issued the registration certificate - appellant neither paid service tax nor filed return - Notice dated 29-7-1999 was issued requiring it to file the return and after correspondence, it was clarified that even if the appellant did not have profit motive and was not commercial concern , it was liable to pay Service tax - appellant raised contentions that Profit motive was essential before case of an assessee is covered by the service tax and authority could not have invoked the extended period of limitation - Held that - As per definition of security agency under Section 65(94) service provider should be engaged in the business rendering specified service. There is no warrant for reading therein requirement of profit motive. - Decided against the assessee. Applicability of limitation law - held that - Statutes of limitation are thus retrospective in so far as they apply to all legal proceedings brought after their operation for enforcing causes of action accrued earlier, but they are prospective in the sense that they neither have the effect of reviving a right of action which is already barred on the date of their coming into operation nor do they have the effect of extinguishing a right of action subsisting on that date, appeal is dismissed

Summary

Issues:
1. Interpretation of the term 'commercial concern' in the context of a security agency.
2. Application of the test laid down by the Tribunal regarding the commercial concern status.
3. Analysis of Section 15(2) of the PESCO Act and its impact on the appellant's functions.
4. Justification of the longer period of limitation for revenue under Section 73(1) of the Finance Act, 1994.
5. Determination of the applicable provision of Section 73 of the Finance Act, 1994.
6. Validity of invoking a larger period of limitation by the Tribunal.
7. Clarification on the application of Section 73 of the Finance Act, 1994, pre and post the amendment.

Issue 1:
The appellant, a statutory Corporation under the PESCO Act, claimed not to be a 'commercial concern' falling under the definition of a 'security agency.' The Tribunal applied a test based on commercial pricing, balance sheets, and profit motive to determine the commercial concern status.

Issue 2:
The Tribunal's test for assessing the appellant's commercial concern status was compared to a Supreme Court judgment. The Tribunal's decision was upheld based on the appellant's pricing strategies, financial accounts, and profit generation activities.

Issue 3:
The interpretation of Section 15(2) of the PESCO Act was debated, focusing on whether it outlines the appellant's functions or confers powers to achieve the Act's objectives. The Tribunal's view was upheld regarding the appellant's operational scope under this section.

Issue 4:
The justification for applying a longer limitation period of five years for revenue under Section 73(1) of the Finance Act, 1994, was examined. The Tribunal's decision on the extended limitation period was deemed valid in the given circumstances.

Issue 5:
The Tribunal's choice of the applicable provision of Section 73 of the Finance Act, 1994, pre and post the amendment was scrutinized. The Tribunal's decision to apply the provision pre-amendment was upheld in the judgment.

Issue 6:
The Tribunal's decision to invoke a larger limitation period beyond the show cause notice and Commissioner Appeals' order was challenged. The Tribunal's action was justified as it was within the scope of the case and circumstances presented.

Issue 7:
The application of Section 73 of the Finance Act, 1994, pre and post the amendment was assessed. The Tribunal's determination to apply the provision pre-amendment was supported, and the judgment dismissed the appeal based on the legal analysis and precedents cited.