2013 (7) TMI 234 - AT - Service Tax

Stay - Health club and fitness service Extended period of limitation - Held that - The appellant were under bona fide belief that they are not liable to pay Service Tax - being a Municipal Corporation, the suppression of facts with intent to evade duty is not sustainable in law. - assessee offers to make pre-deposit of Service Tax demand involved during the normal period of time, which is approximately Rs.35 lakhs. - stay granted subject to deposit of Rs. 35 lakhs.

Summary

Issues:
Service Tax liability on various services provided by a Municipal Corporation. Allegation of suppression of facts with intent to evade duty. Invocation of extended period of time for demand of Service Tax. Appellant's contention of being a local authority and unaware of Service Tax liability. Acceptance of pre-deposit offer by the Appellant.

Analysis:
The case involves an appeal and stay application against an Order-in-Original passed by the Commissioner of Central Excise & Service Tax, Aurangabad. The Appellant, a Municipal Corporation, provided services like renting of immovable property, mandap-keeper service, sale of space for advertisement, supply of tangible goods, and health club service. The Appellant failed to discharge Service Tax liability for these services during specific periods. The impugned order confirmed the demand, interest, and penalties under relevant sections of the Finance Act, 1994.

The Appellant contended that they were not aware of their Service Tax liability as a local authority. They highlighted the pending issue regarding renting of immovable property service, which was resolved in favor of the Revenue by the Hon'ble Bombay High Court in 2010. The Appellant claimed a bona fide belief in not being liable to pay Service Tax. Despite this, they started discharging the Service Tax. The Appellant offered to make a pre-deposit of approximately Rs. 35 lakhs, representing the Service Tax demand during the normal period.

On the other hand, the Revenue argued that the Appellant received letters and summons regarding the issue, which were disregarded. The Revenue invoked the extended period of time due to the Appellant's inaction. Considering the Appellant's status as a Municipal Corporation, the Tribunal found it difficult to sustain the allegation of suppression of facts with intent to evade Service Tax. Consequently, the Tribunal accepted the Appellant's offer to make a pre-deposit of Rs. 35 lakhs within six weeks. Upon compliance, the pre-deposit of the remaining dues would be waived, and recovery stayed during the appeal's pendency.