2014 (1) TMI 43 - AT - Service Tax

Demand of service tax - Bar of limitation - Commissioner set aside demand - Held that - Commissioner (Appeal) has examined in detail the applicability of extended period in the present case. There is no dispute about the fact that ST-3 Return for the first six month of the year was filed on 15.10.2003 and ST-3 Return for the second six month was filed on 16.04.2004 There is also no dispute that the Show Cause Notice has been singed by the Assistant Commissioner on 19.01.2006 and Show Cause Notice has been issued without invoking the proviso to Sub-Section 73(1) of the Finance Act. It is also on record that Show Cause Notice does not make any allegation about suppression etc. - no infirmity in the finding of the Commissioner (Appeal) that Show Cause Notice is hit by the time limitation - Decided against Revenue.

Summary

Issues:
1. Time limitation for issuance of Show Cause Notice under Section 73 of the Finance Act.
2. Allegations of suppression of taxable services and intent to evade payment of service tax.
3. Consideration of taxable value in ST-3 returns and discrepancies with income tax returns.

Analysis:
1. The appeal was filed by the Commissioner Central Excise against the Order-in-Appeal passed by the Commissioner Central Excise & Service Tax, Lucknow. The main contention was regarding the time limitation for issuing the Show Cause Notice under Section 73 of the Finance Act. The Revenue argued that the extended period of limitation was applicable due to suppression of facts by the respondents. However, the appellant contended that the Show Cause Notice was time-barred as it was issued without invoking the relevant provisions of the Finance Act. The Commissioner (Appeal) found that the Show Cause Notice was indeed hit by the time limitation as it was issued without invoking the proviso to Sub-Section 73(1) of the Finance Act, and without alleging suppression of facts.

2. The case involved allegations of suppression of taxable services and intent to evade payment of service tax by the respondents. The Revenue claimed that there was a significant difference between the value of taxable services declared in the ST-3 returns and the income tax returns, indicating a suppression of taxable value. The Revenue issued a Show Cause Notice demanding service tax, interest, and penalties. However, the Commissioner (Appeal) allowed the appeal filed by the respondents, stating that the Show Cause Notice was time-barred. The Commissioner upheld this decision, emphasizing that the Notice did not make any allegations of suppression, and therefore, the extended period of limitation was not applicable.

3. Another issue in the case was the consideration of taxable value in the ST-3 returns and the discrepancies with the income tax returns. The respondents had accounted for a taxable value in their ST-3 returns, which was significantly lower than the value declared in the income tax returns. The Commissioner (Appeal) analyzed the details provided in the returns and accepted the respondents' explanation that certain amounts, such as diesel charges and travel expenses, were not part of the security services provided. The Commissioner upheld this finding, concluding that the discrepancies in the taxable values were accounted for by legitimate expenses not related to the taxable services. Consequently, the Order-in-Appeal was upheld, and the appeal filed by the Revenue was rejected.