2016 (3) TMI 107 - AT - Service Tax

Demand of Service Tax along with interest and penalty - Invokation of extended period - vValue of service declared in the periodical returns, i.e., ₹ 83,27,454/- was more than the value shown in the show cause notice, i.e., ₹ 82,48,726/- - The appellant placed copies of ST-3 returns on record which reflect the value of services provided - Held that as there was no fraud or suppression of facts or contravention of any provisions of Service Tax law with intent to evade payment of service tax, the extended period under Section 73(1) is not applicable. Also, there was the genuine omission to pay tax @ 10.2% instead of @ 8% which is a bona fide act, this is because of which extended time period under Section 73 cannot be invoked. Therefore, the demand for the period 2004-05 to 2006-07 is time-barred and the interest and penalty under Section 78 cannot be demanded. - Decided in favour of appellant

Summary

Issues:
1. Applicability of extended time period under Section 73(1) of the Service Tax law.
2. Allegation of wilful suppression of taxable value and evasion of Service Tax.
3. Correctness of penalty imposition under Section 76 and Section 78 of the Finance Act.
4. Interpretation of the Supreme Court's judgment in Pushpam Pharmaceuticals and Commissioner of Central Excise v. Busy Bee.
5. Assessment of the genuineness of the omission to pay tax at the revised rate.

Analysis:
1. The appeal concerned a security agency providing taxable services under the Finance Act, 1994 to a university. The appellant was accused of wilfully suppressing taxable value, leading to an alleged evasion of Service Tax. A show cause notice was issued invoking the extended time period under Section 73(1) of the Service Tax law.

2. The appellant contested the notice, arguing that they had paid a significant portion of the Service Tax before the notice was issued and had accurately disclosed the taxable value in their ST-3 returns. They claimed that the discrepancy in tax payment arose due to the university reimbursing tax at a lower rate than the revised rate applicable during a specific period.

3. The Commissioner (Appeals) reduced the demand and corresponding penalties, considering the change in tax rates during the period in question. However, the tribunal found that the extended time period under Section 73(1) was not applicable as the value declared in the returns exceeded the amount in the show cause notice. The Revenue failed to establish fraud, suppression, or contravention of tax laws with intent to evade payment.

4. Relying on precedents like Pushpam Pharmaceuticals and Commissioner of Central Excise v. Busy Bee, the tribunal determined that the omission to pay tax at the revised rate was a genuine mistake, not deliberate evasion. The tribunal concluded that the demand for Service Tax for the period in question was time-barred, rendering the penalty under Section 78 unsustainable.

5. Ultimately, the tribunal allowed the appeal, setting aside the demand for Service Tax, interest, and penalties under Section 78. The decision emphasized the absence of fraudulent intent or suppression of facts, leading to the conclusion that the appellant's actions were bona fide and not subject to extended time provisions.

This detailed analysis outlines the key legal issues, arguments presented, and the tribunal's reasoning behind allowing the appeal and setting aside the penalties and demands imposed on the appellant.