2015 (11) TMI 783 - AT - Service Tax

Demand of interest - Bar of limitation - Imposition of penalty - Held that - Appellant did not obtain registration during the relevant period. Secondly it has been correctly observed by the first appellate authority in para 6 of the Order-in-Appeal dated 8.10.2012 that appellant also did not file return within 6 months from the date when Finance Bill, 2003 received assent from the President of India i.e. 13.5.2003. This fact was known to the department only when audit was done by the officer of the department after appellant obtained registration. In view of the factual matrix extended period has been correctly invoked and demand is not time barred. Interest demanded from the appellant is payable as a demand issued within a reasonable period. - However, penalty imposed is set aside - Decided partly in favour of assessee.

Summary

Issues involved:
1. Appeal against Order-in-Appeal dated 8.10.2012
2. Payment of service tax on merits
3. Time-barred show cause notice
4. Imposition of penalty under sections 76, 77 & 78
5. Invocation of extended period for demand of interest

Detailed Analysis:
1. The appellant filed an appeal against Order-in-Appeal No.200/BOL/2012 dated 8.10.2012, passed by the Commissioner(Appeals) of Central Excise, Kolkata-III. The first appellate authority upheld the Order-in-Original No.135/AC/BDN/ST/NPI/2007-08 dated 28.3.2008. The appellant argued that service tax was not payable on merits and that the demand of interest by a corrigendum dated 21.7.2008 was unjustified. The appellant contended that the show cause notice issued after 2 years, 7 months & 26 days of the Finance Bill 2003 was time-barred. The appellant also challenged the penalties under sections 76, 77 & 78, citing a case law precedent.

2. The respondent argued that the appellant did not obtain service tax registration or file a return within six months after the retrospective amendment to the Finance Bill 2003. The respondent contended that the extended period would be applicable, and the demand of interest would not be time-barred. The Tribunal observed that the appellant did not raise the issue of payment of tax on merits before the first appellate authority. As the appellant only argued the issue of being time-barred, the Tribunal held that the ground for non-chargeability of tax on merits could not be entertained at that stage.

3. Regarding the invocation of the extended period, it was noted that the appellant did not obtain registration during the relevant period and did not file a return within six months of the Finance Bill 2003 receiving assent. The Tribunal found that the extended period was correctly invoked as the department became aware of the non-compliance only during an audit after the appellant obtained registration. The demand of interest was deemed payable within a reasonable period.

4. In terms of the imposition of penalties, the Tribunal observed that a composite penalty under sections 76, 77 & 78 was not permissible under the law. The issue of payment of service tax on transportation services was disputable, leading to a retrospective amendment. Therefore, the penalties imposed on the appellant were deemed unjustified and were set aside. The appeal was allowed only to the extent indicated in the Tribunal's decision.