2019 (4) TMI 1959 - AT - Service Tax

Demand of Interest and penalty - repair and maintenance services - under some mistaken belief they failed to discharge their service tax liability - wilful suppression of facts or not - bonafide belief or not - extended period of limitation - HELD THAT - The appellant has failed to fully justify their bonafide belief to the non-taxability of the impugned services. Accordingly the extended period has been correctly invoked and consequent interest and penalties are also justified in this case. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Challenge against invoking the extended period of limitation.

Analysis:
The appellant provided repair and maintenance services to a company from April 2006 to March 2011 but failed to pay the service tax. The department issued a show cause notice amounting to &8377; 5,97,219 for the period, invoking the extended period. The adjudicating authority confirmed a demand of &8377; 1,90,958 along with penalties. The Commissioner (Appeals) upheld the order, leading to the current appeal solely challenging the extended period of limitation.

The appellant argued that they had informed the department about their services before any inquiry, thus no wilful suppression occurred. They claimed ignorance of tax laws and sought guidance from the department, maintaining that they accounted for all services and financial transactions in their tax returns. They cited case laws to support their stance that seeking clarification precludes invoking the extended period and penalties.

On the other hand, the department contended that the appellant's ignorance of the law was not a valid excuse, emphasizing that the audit of the service recipient revealed the tax liability non-compliance. The department argued that the appellant's belated realization of tax liability and failure to inform the department constituted suppression of facts, justifying the extended period and penalties imposed.

The Tribunal found the appellant's justification for non-taxability insufficient, agreeing with the department that the extended period and associated penalties were warranted due to the appellant's failure to demonstrate a bona fide belief in their position.

Ultimately, the Tribunal dismissed the appeal, upholding the invocation of the extended period of limitation and the consequent interest and penalties, as the appellant failed to justify their belief regarding the non-taxability of the services provided.