2014 (6) TMI 627 - AT - Service Tax

Business Auxiliary Service - extended period of limitation - demand based on ST-3 return - Benefit of Notification No. 14/2004-ST dated 10.9.2004 wrongly availed - Held that - it is seen that assessee mentioned N.A. in the column meant for value of taxable service which is understandable as during the said months they did consider the impugned service as exempt i.e. non-taxable. There is no other ground given in the SCN for alleging wilfull mis-statement / suppression of facts. Indeed, the adjudicating authority itself considered the case fit enough for the benefit of Sec 80 of Finance Act 1994. Thus even the adjudicating authority conceded that there was a reasonable cause for the Respondents failure to pay tax. As is evident from the facts of this case, the reasonable cause for failure was their belief that the impugned service was exempt during the period 10.09.2004 to 15.06.2005 - Thus, it is evident that there is not even an iota of evidence to even suggest that there was any wilfull mis-statement or suppression of facts on the part of the Respondents. Consequently, extended period is not invokable in this case - time limit for raising demand is only one year in the absence of the ingredients required for invoking the extended period of five years, the demand is clearly time barred - Decided against Revenue.

Summary

Issues involved:
1. Interpretation of Notification No. 14/2004-ST dated 10.9.2004.
2. Whether the services provided fall under the category of 'provision of service on behalf of the client.'
3. Allegations of wilful misstatement and suppression of facts.
4. Applicability of extended period for invoking demand.
5. Eligibility for exemption under Notification No. 14/2004-ST.
6. Time-barred demand and penalty imposition.

Issue 1: Interpretation of Notification No. 14/2004-ST dated 10.9.2004:
The Respondents claimed exemption under this notification, contending that their services fell under the provision of service on behalf of the client. However, the Tribunal found that the services provided did not align with this category, thereby denying the benefit of the said notification. A previous case was cited to support this decision.

Issue 2: Whether the services provided fall under the category of 'provision of service on behalf of the client':
The Tribunal examined the nature of services rendered by the Respondents to ICICI Bank and concluded that they were acting as Direct Sales Agents for marketing ICICI Bank's products. The agreement between the parties indicated that the Respondents were providing promotional and marketing services to the bank, rather than engaging in the provision of service on behalf of the client.

Issue 3: Allegations of wilful misstatement and suppression of facts:
The Revenue alleged that the Respondents wilfully suppressed information to evade service tax, citing discrepancies in the ST-3 returns filed. However, the Tribunal found no evidence of wilful misstatement or suppression of facts, as the Respondents had paid service tax before and after the disputed period and had reasonable cause to believe the service was exempt during the relevant time frame.

Issue 4: Applicability of extended period for invoking demand:
The Revenue sought to invoke the extended period for raising the demand based on alleged suppression of information. However, the Tribunal ruled that there was no justification for invoking the extended period, as there was no evidence of wilful misstatement or suppression of facts by the Respondents.

Issue 5: Eligibility for exemption under Notification No. 14/2004-ST:
The Respondents argued that they were eligible for the exemption under the said notification due to their status as a proprietorship providing services on behalf of clients. However, the Tribunal's analysis revealed that their services did not qualify for this exemption, leading to the denial of their claim.

Issue 6: Time-barred demand and penalty imposition:
The Tribunal determined that the demand raised by the Revenue was time-barred, as the period for raising the demand exceeded the statutory limit. Consequently, the Tribunal dismissed the Revenue's appeal, as the demand did not survive due to being time-barred, thereby negating the imposition of any penalty.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's reasoning behind its decision.