2014 (8) TMI 197 - AT - Service Tax

Extended period of limitation - rent-a-cab service - bondafide belief - Held that - while setting aside the penalty, the appellate authority has given a clear finding that there was no mala fide on the part of the appellant. If that be so, I really fail to understand that how the longer period of limitation can be invoked against the assessee, in the absence of any mala fide. - Tribunal in the case of Royal Travels Vs. CCE Vadodara - 2010 (9) TMI 104 - CESTAT AHMEDABAD has held that once penalty stands set aside by the appellate authority, the longer period cannot be said to be available to the Revenue for raising the demand. - major part of the demand would be barred by limitation - matter remanded back for re-quantification - Decided in favor of assessee.

Summary

Issues:
1. Service tax demand against the appellant for the period 2006-2011.
2. Challenge on the point of time-barred by the appellant.
3. Imposition of penalty under Section 76, 77, and 78 of the Finance Act, 1994.
4. Applicability of longer period of limitation in the absence of mala fide.
5. Remand for re-quantification of the demand within the limitation period.

Analysis:
1. The judgment addresses the service tax demand confirmed against the appellant for providing rent-a-cab services to a specific entity. The demand was raised through a Show Cause Notice dated 28.9.2011 for the period 2006-2011, with a corresponding penalty imposed by the original adjudicating authority.

2. The appellant contested the order before the Commissioner (Appeals) primarily on the grounds of time limitation. The appellate authority rejected the appellant's plea of limitation, citing a lack of bona fide belief for non-payment of service tax. However, the penalty issue was approached differently, with a finding that there was no mala fide intention on the part of the appellant, leading to the setting aside of penalties under Section 76, 77, and 78 of the Finance Act, 1994.

3. The appellate authority's decision to set aside the penalty was based on the appellant's genuine belief that the amounts received were exempt from service tax due to falling within the threshold limit. The absence of deliberate default or willful non-payment of service tax was highlighted, emphasizing the inadvertent nature of the non-payment. Legal precedents were referenced to support the argument that penalties should not be imposed in cases of genuine disputes or reasonable causes for non-compliance with tax obligations.

4. The judgment further delves into the issue of invoking the longer period of limitation in the absence of mala fide intentions. Citing a previous tribunal decision, it was established that once penalties are set aside, the longer period cannot be utilized by the Revenue for raising demands. Consequently, the major part of the demand was deemed time-barred, leading to a remand for re-quantification of the demand falling within the limitation period.

5. In conclusion, the appeal was disposed of with a directive for re-quantification of the demand within the limitation period, reflecting a nuanced approach to balancing tax liabilities with considerations of bona fide beliefs and penalty impositions based on the presence or absence of mala fide intentions.