2012 (5) TMI 398 - AT - Service Tax

Manpower Recruitment and Supply Agency services - non payment of service tax - extended period of limitation - suppression of facts - contention of the appellants is that, since the issue pertains to interpretation of relevant clauses of Finance Act, 1994, neither could penalty under Section 76, 77 and 78 of Finance Act, 1994 be imposed nor the extended period of limitation, for the purpose of confirming demand be invoked Held that - in the case of Lanxess ABS Limited (2010 - TMI - 202555 - CESTAT, AHMEDABAD - Central Excise) issue involves interpretation of relevant clauses of Finance Act, appellant cannot be held responsible for interpreting the same in such that it could be beneficial to them. no penalty under Section 78 of the Finance Act, 1994 is imposable as also extended period of limitation for the purpose of confirming demand is also not invokable. appeal filed by the appellant is allowed

Summary

Issues:
- Imposition of penalty under Sections 76 and 78 of the Finance Act, 1994 simultaneously
- Invocation of extended period of limitation for confirming demand of service tax

Imposition of Penalty under Sections 76 and 78:
The appeal involved contestation regarding the imposition of penalties under Sections 76 and 78 of the Finance Act, 1994 simultaneously. The appellants argued that penalties under both sections cannot be imposed concurrently, citing various judgments in support of their contention. The Tribunal noted that a specific amendment on 10-5-2008 clarified that penalties under these sections cannot be imposed simultaneously, even for cases predating the amendment. The Tribunal upheld this legal principle and concluded that penalties under Sections 76 and 78 cannot be imposed concurrently.

Invocation of Extended Period of Limitation:
Regarding the invocation of the extended period of limitation for confirming the demand of service tax, the Tribunal analyzed the facts. It was observed that the issue primarily revolved around the interpretation of the definition of "Cleaning services." The adjudicating authority confirmed a demand for a specific amount out of the total proposed demand, indicating a focus on the interpretation of the relevant clauses of the Finance Act. The confusion among audit officers regarding the nature of services provided further supported the argument that the issue involved interpretation of relevant clauses. Relying on precedent, the Tribunal determined that the appellant could not be penalized for interpreting the clauses in a manner beneficial to them. Consequently, the Tribunal ruled that no penalty under Section 78 of the Finance Act, 1994 could be imposed, and the extended period of limitation for confirming the demand was not applicable in this case.

Conclusion:
After thorough deliberation on the issues raised, the Tribunal allowed the appeal filed by the appellant. The judgment highlighted the legal principles regarding the imposition of penalties under Sections 76 and 78 of the Finance Act, 1994 and the invocation of the extended period of limitation for confirming the demand of service tax. The decision provided clarity on the simultaneous imposition of penalties and the interpretation of relevant clauses of the Finance Act in determining tax liabilities.