2014 (4) TMI 488 - AT - Service Tax

Demand of Service tax - discrepancy in the figures in the balance sheet and service returns - Banking and financial service - Bar of limitation - Held that - To invoke the extended period of limitation, the following ingredients are to be ascertained - fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of section or rules with intent to evade payment of service tax. In this case, the allegation against the respondent is that they have suppressed the material fact which was came to the knowledge of the department during the audit. After going through the facts of the case, I find that during the impugned period, service tax is required to be paid at the time of receipt of the remuneration towards the service provided. In service tax returns, there is no column for receipt, what the services has been provided and how much has been received for the service provided. Every service tax returns has to shown amount of recovery towards the service provided not on accrual basis. But the respondents are maintaining their books of accounts on accrual basis as per Income Tax and Banking Regulation. So these two documents cannot be clubbed together to ascertain the fact in the absence of service tax returns and there is no duty cast on the assessee in the Finance Act that he is to provide the details of service provided and service receipt during the impugned period. In these circumstances, I hold that there was no suppression of fact on the part of the respondent - Matter remanded back for computation of demand for normal period only - Decided partly in favour of Reveune.

Summary

Issues:
1. Appellant's appeal against the impugned order and application for stay.
2. Benefit allowed to the respondent on the issue of limitation by Commissioner(Appeals).
3. Invocation of extended period of limitation for the period April 2004 to March 2008.
4. Allegation of suppression of material facts by the respondent.
5. Interpretation of service tax payment requirements and maintenance of books of accounts by the respondent.
6. Decision on the invocability of the extended period of limitation.
7. Remand of the matter back to the Commissioner(Appeals) for examination of demands pertaining to the normal period of limitation.

The appellant appealed against the impugned order and applied for a stay, challenging the decision of the Commissioner(Appeals) who allowed the benefit to the respondent concerning the issue of limitation. The case involved an allegation of discrepancy in figures between the balance sheet and service tax returns of a Banking company, leading to the issuance of a Show-cause notice in 2009 for the period April 2004 to March 2008 based on the extended period of limitation. The adjudicating authority confirmed the demand, but the Commissioner(Appeals) held that the extended period of limitation was not invocable, setting aside the adjudication order. The revenue appealed the decision.

The argument presented by the appellant's representative focused on the reliance of the Commissioner(Appeals) on a previous case, Chemphar Drugs & Liniments, to support the decision regarding the invocability of the extended period of limitation. The appellant contended that the facts of the referenced case differed from the current case, suggesting that the impugned order should be set aside, and the matter should be remanded back to the Commissioner(Appeals) for a decision on merits.

Conversely, the respondent's counsel acknowledged that some demands fell within the normal period of limitation and emphasized that the extended period of limitation was not applicable due to the absence of suppression on their part. The counsel proposed remanding the matter back to the Commissioner(Appeals) for a detailed examination of the demands within the normal period of limitation.

The presiding judge deliberated on the requirements for invoking the extended period of limitation, which include fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions with intent to evade service tax payment. After analyzing the case, it was determined that there was no suppression of material facts by the respondent, as the service tax was required to be paid upon receipt of remuneration for services provided. The judge noted the difference between service tax returns and the accrual basis of accounting maintained by the respondent, concluding that the extended period of limitation was not applicable. Some demands were found to fall within the normal period of limitation, warranting further examination by the Commissioner(Appeals).

Ultimately, the appeal was allowed by way of remand, directing the matter to be reconsidered by the Commissioner(Appeals) for a detailed examination of the demands falling within the normal period of limitation.