2013 (12) TMI 263 - AT - Service Tax

Demand of service tax - Management of cars/scooter parking facilities at Indira Gandhi International Airport - Penalties under Section 76, 77 and 78 of the Finance Act - Invocation of extended period of limitation - Suppression of facts - Held that - assessee is engaged in providing the taxable Airport Service with effect from 10.09.2004 to 31.03.2006 and has received the consideration for services on which the service tax has been demanded by the Department. We find that Airport Services has been brought into service tax net with effect from 10.09.2004 and under Section 65(105)(zzm) of the Act. Assessee has entered into an agreement with the Airport Authority for providing the cars/scooter parking facilities in various areas in the Airport. After examining the various provisions of the agreement between AAI and the assessee and also the various taxable provisions of the Finance Act the Commissioner has concluded that services related to managing the parking facilities at Airports to the passengers as well as to the visitors is fully covered under the taxable Airport Service as defined under Section 65 (105)(zzm) and accordingly he held that demand of Rs. 1,93,55,142/- is payable by the assessee. We find that appellant has not challenged the levy of service tax on the parking facilities and they have challenged the order on the ground of invocation of extended period of limitation under section 73(1) of the Finance Act, on the ground that the appellants/assessee was in communication with the Airport Authority seeking clarification whether service tax is required to be collected by them from customers and it is also the contention of the assessee that since the penalty has not been imposed on assessee there is no case of invocation of extended period of limitation. Assessee had never disclosed the material fact of providing such taxable services and was charging consideration from the service recipients throughout the period 10.09.2004 and 31.03.2006. Assessee had not paid the service tax to the Government account at the prescribed time during the disputed period. These actions on part of assessee amount to suppression of material fact from the Department and assessee had contravened the provisions of the Finance Act, with intention to evade the payment of service tax and therefore the extended period limitation has rightly been invoked by the Commissioner. Once it is held by the Commissioner that extended period is invocable and there was suppression of fact on behalf of assessee there cannot be any reasonable cause for failure of payment of service tax. Accordingly we do not agree with the finding to the Commissioner with regard to benefit granted under Section 80 of Act in not imposing the penalty under Section 78 of the Finance Act. We set aside this finding of the Commissioner and hold that penalty under Section 78 of the Finance Act is imposable on the assessee - Decided against assessee.

Summary

Issues:
1. Taxability of car parking services provided at the airport under the Airport Service category.
2. Application of extended period of limitation for demand of service tax.
3. Imposition of penalty under Section 78 of the Finance Act.

Analysis:

Issue 1: Taxability of Car Parking Services
The case involved two appeals, one by the appellant/assessee and the other by the Revenue, against the Order-in-Original passed by the Commissioner Service Tax, Delhi. The appellant was engaged in managing car parking facilities at the airport, and the Department considered these activities as taxable services falling under the Airport Service category. The Department issued a Show Cause Notice demanding service tax, interest, and penalties. The Commissioner confirmed the service tax amount but did not impose penalties on the assessee. The appellant did not contest the levy of service tax but argued that the demand was time-barred as they were authorized to collect service tax only from a specific date. The Tribunal found that the appellant was providing taxable Airport Services and upheld the demand for service tax, rejecting the appeal filed by the appellant.

Issue 2: Application of Extended Period of Limitation
The appellant contended that the extended period of limitation under Section 73(1) of the Finance Act was wrongly invoked as they were in communication with the Airport Authority seeking clarification on collecting service tax. The Commissioner found that the appellant had suppressed material facts, charged consideration from service recipients, and failed to pay service tax during the disputed period. The Tribunal agreed with the Commissioner's decision to invoke the extended period of limitation, as the appellant's actions amounted to evasion of service tax. Consequently, the Tribunal rejected the appellant's appeal on this ground.

Issue 3: Imposition of Penalty
The Revenue challenged the Commissioner's decision not to impose penalties on the appellant. The Tribunal held that when the extended period of limitation is invoked due to suppression of facts by the assessee, there cannot be a reasonable cause for failure to pay service tax. Therefore, the Tribunal disagreed with the Commissioner's decision to grant a waiver from penalty under Section 80 of the Act. The Tribunal set aside this finding and held that penalty under Section 78 of the Finance Act was imposable on the assessee. Consequently, the Tribunal rejected the appellant's appeal and allowed the Revenue's appeal on this issue.

In conclusion, the Tribunal upheld the taxability of car parking services under the Airport Service category, confirmed the demand for service tax, upheld the invocation of the extended period of limitation, and directed the imposition of penalties under Section 78 of the Finance Act on the assessee.