2013 (5) TMI 263 - AT - Service Tax

Outdoor catering service - service tax demand worked out after allowing abatement of 50% of the total catering charges - period from September 2004 to December 2006 - as per adjudicating authority assessee did not have tax liability for the period prior to 16.6.2005 and also invoked Section 80 of the Finance Act, 1994 to drop all penalties - Held that - Appellant fell within the ambit of outdoor caterer as defined at all times inasmuch as he was admittedly catering food to Dr. Reddy s Laboratories Ltd. at a place owned by the latter and it is not the case of the appellant that he was the owner of those premises. Thus it is held that the appellant was liable to pay service tax prior to 16.6.2005 also. For the period from 16.6.2005, there is no room for doubt inasmuch as the amended definition is explicit. Thus the appellant was liable to pay service tax for the entire period. Demand of service tax barred by limitation - Held that - Factum of the service provided to the client was never disclosed by the appellant to the department. It was from the AG s audit note and the connected letters of the appellant that the department gathered the relevant information. This happened during the period from September 2006 to December 2008 & show-cause notice was issued in January 2009 invoking the proviso to Section 73(1) of the Finance Act, 1994 on the alleged ground of suppression with intent to evade payment of service tax. No valid point in the grounds raised by the appellant against invocation of the said proviso. The plea of limitation is therefore rejected. Invoking section 80 - Held that - The statutory definition of outdoor caterer at all times has been clear enough for any prudent person to believe that anyone engaged in providing services in connection with catering at a place other than his own would fit in the definition. Thus it was not open to assessee to plead ignorance of law as an excuse for not getting registered with the department, not filing service tax returns, not paying service tax, etc. Therefore, the plea of bona fide belief raised in this appeal is not acceptable - claim the benefit of Section 80 of the Finance Act, 1994 denied - against assessee.

Issues:
1. Liability of service tax for outdoor catering service.
2. Applicability of exemption from service tax.
3. Claim of limitation against the demand of service tax.
4. Imposition of penalties under Sections 76 and 78 of the Finance Act, 1994.
5. Benefit of Section 80 of the Finance Act, 1994.

Liability of service tax for outdoor catering service:
The case involved a dispute regarding the liability of service tax for outdoor catering service provided by the appellant to a company. The original authority confirmed a demand of service tax against the appellant, which was later upheld by the Commissioner (Appeals). The appellate tribunal held that the appellant fell within the definition of an outdoor caterer as per the Finance Act, 1994, and was liable to pay service tax for the entire period in question. The tribunal emphasized that the appellant was catering at a place owned by the client, making him liable for service tax.

Applicability of exemption from service tax:
One of the issues raised was whether the appellant could claim exemption from payment of service tax for the period prior to a specific date. The tribunal analyzed the relevant provisions of the Finance Act, 1994, defining an outdoor caterer. It concluded that the appellant did not qualify for exemption as he fell within the definition of an outdoor caterer throughout the relevant period. The tribunal highlighted the clarity of the statutory definition and rejected the appellant's claim for exemption.

Claim of limitation against the demand of service tax:
The appellant raised a plea of limitation against the demand of service tax, arguing that the information about the service provided was not disclosed earlier. However, the tribunal rejected this plea, noting that the relevant information was obtained by the department from an audit note and letters during a specific period. The tribunal held that the invocation of the proviso to Section 73(1) of the Finance Act, 1994, due to suppression of facts was justified, and thus, the plea of limitation was dismissed.

Imposition of penalties under Sections 76 and 78 of the Finance Act, 1994:
The show-cause notice had proposed penalties under Sections 76 and 78, but the original authority refrained from imposing them, citing the appellant's confusion over tax liabilities. However, the Commissioner (Appeals) imposed penalties on the appellant. The tribunal upheld the decision, stating that the appellant could not claim ignorance of the law as a defense. It concluded that the penalties were justified, and the benefit of Section 80 of the Finance Act, 1994, was not applicable in this case.

Benefit of Section 80 of the Finance Act, 1994:
The tribunal analyzed the applicability of Section 80 of the Finance Act, 1994, which provides relief from penalties in certain cases. It noted that the appellant's plea of bona fide belief was not acceptable, as the statutory definition of an outdoor caterer was clear. The tribunal concluded that the appellant was not entitled to the benefit of Section 80, and the penalties imposed by the Commissioner (Appeals) were justified. Consequently, the appeal was rejected by the tribunal.

This detailed analysis of the judgment covers all the issues involved comprehensively, providing a thorough understanding of the tribunal's decision and the legal reasoning behind it.

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