2013 (12) TMI 793 - AT - Service Tax

Demand of service tax - Disclosure of registratio fees in ST-3 Return - Inclusion of registration fees in taxable value - Held that - respondents were paying service tax as provider of online information and data base access or retrieval or both. The respondents are not disputing the taxability of their service - The registration fee is not refundable as such. The registration fee will be adjusted to the first purchase made by the clients in case no purchase is made the registration fee is not to be refunded. In view of this, the registration fee is not to be refunded as such, hence is required to be added to the gross value of taxable service on which the respondents are liable to pay service tax - respondent has not disclosed this fact regarding collection of registration fee in the ST3 returns. It is only during the scrutiny of records it was found that the registration fee is not added to the gross value of the taxable service. Hence the allegation of suppression with intent to evade tax is also sustainable - Decided in favour of Revenue.

Summary

Issues: Appeal against the order passed by the Commissioner (Appeals) allowing the appeal filed by the respondent on merits and time bar regarding service tax on registration fee collected.

Analysis:

1. Issue of Taxable Service and Registration Fee: The respondent, registered under service tax, provided online information and e-learning services along with trading activities. The Revenue contended that the registration fee collected by the respondent was part of the taxable service value, as it was not refundable and formed part of the correct value of the service. The adjudicating authority confirmed the demand and penalties based on this contention.

2. Appeal and Decision: The respondent appealed before the Commissioner (Appeals), who allowed the appeal, leading to the Revenue's appeal. The Commissioner (Appeals) held that the registration fee was refundable, thus not liable for service tax. However, the Revenue argued that the fee was non-refundable and should be added to the taxable service value for tax liability.

3. Time Bar Issue: The Revenue raised a time bar issue, stating that the registration fee was not declared to the department or in the ST3 returns. The Revenue claimed that the respondent's failure to disclose this amount earlier indicated suppression with intent to evade tax, making the impugned order unsustainable.

4. Judgment and Conclusion: The Tribunal found that the registration fee was non-refundable and should be added to the taxable service value for service tax liability. Regarding the time bar issue, it was noted that the respondent did not disclose the registration fee in the ST3 returns, leading to a sustainable allegation of suppression. Consequently, the impugned order was set aside, the original order restored, and the appeal was allowed, ruling in favor of the Revenue.