2014 (12) TMI 1349 - HC - Service Tax

Recovery of service tax - Section 73 (1) of the Finance Act, 1994 - suppression of facts - HELD THAT - The finding of fact is based on a proper appreciation of the material on record and since no material was placed by the appellant Department to show that there was suppression of facts by the respondent Agency, the Tribunal rightly held that the appellant Department was not liable to levy the service tax for a period extending one year - Since none of the ingredients mentioned in the proviso to Section 73 of the Act applied to the facts of the case, the Tribunal rightly found that the imposition of penalty on the respondent was not justified as penalty could be levied under Section 78 of the Act, only if either of the five ingredients in the proviso to Sub Section 1 of Section 73 of the Act, which are also the ingredients mentioned in Section 78 of the Act for imposition of penalty, were satisfied. Since the finding recorded by the Tribunal does not give rise to any substantial question of law, the appeal is dismissed with no order as to costs.

Summary

Issues:
Challenge to order of Customs Excise and Service Tax Appellate Tribunal regarding demand for service tax for a specific period.

Analysis:
The High Court dealt with the challenge raised by the Commissioner of Central Excise, Customs, and Service Tax against the order of the Customs Excise and Service Tax Appellate Tribunal. The Tribunal had partly allowed an appeal by the respondent, setting aside the demand for service tax, except for the period from 1.4.2005 to 31.3.2006. The appellant contended that the Tribunal erred in holding that the appellant was only entitled to recover service tax for one year, and the proviso to Section 73 (1) of the Finance Act, 1994 did not apply. The appellant claimed suppression of facts by the respondent, seeking service tax for the period from 1.4.2003 to 31.3.2006, along with the levy of penalties under Section 78 of the Act.

The High Court, however, found no merit in the appellant's submission. It noted that the Tribunal, after examining the material on record, observed a confusion even among Departmental Officers regarding the applicability of service tax to the services provided by the respondent. The Tribunal concluded that none of the proviso's ingredients to Section 73 (1) applied to the case, thus rejecting the appellant's claim for service tax recovery beyond one year. The Tribunal did not find any non-payment or underpayment of service tax by the respondent due to reasons specified in the proviso. Considering the submissions of the respondent, the Tribunal's factual finding was deemed appropriate, as no evidence of fact suppression by the respondent was presented by the appellant.

The High Court upheld the Tribunal's decision, stating that no substantial question of law arose from the findings. The appeal was dismissed, and no costs were awarded. The Court reiterated that penalty under Section 78 of the Act could only be imposed if the conditions specified in the proviso to Section 73 (1) were met, which were not applicable in this case.