2019 (6) TMI 1683 - AT - Service Tax

Levy of penalty - service tax along with interest paid paid before issuance of SCN - Management Consultancy services - period 2002-03 to 2007-08 - Intent to evade tax or not, appellant being PSU - extended period of limitation - HELD THAT - In the Show Cause Notice as well as in the impugned adjudication order, there is no positive evidence to show that service tax has been intentionally not paid except that mere allegation of suppression has been made to invoke the extended period of limitation. In view thereof, there are no case of suppression and hence, set aside the demand of service tax confirmed for the period covered under the extended period of limitation. Since this is not a case of suppression, imposition of penalties under Section 77 and 78 are also set aside in view of Section 80 of the Act. The appeal is thus allowed by way of remand for limited purpose of calculation of service tax leviable for normal period of limitation on cum-tax basis.

Summary

Issues:
Appeal against demand of service tax under Management Consultancy services for the period 2002-03 to 2007-08, interest, and penalty.

Analysis:
The appeal was filed by M/s. Coal India Limited challenging the demand of service tax under Management Consultancy services for the mentioned period, along with interest and penalty. The appellant, a PSU engaged in coal mining, charged 'Apex Charges' for various assistance provided to its subsidiary companies. During an audit, it was discovered that the appellant had not paid the service tax under Management Consultancy services. However, the appellant paid the entire service tax with interest before the issuance of the Show Cause Notice. The appellant contended that they had a bona fide belief that they were not liable to pay the tax and challenged the imposition of penalty. The Departmental Representative argued that the appellant paid the tax only after audit proceedings were initiated. The Tribunal noted that the appellant had paid the tax before the Show Cause Notice was issued and did not press on the taxability issue but argued against the charge of wilful suppression to evade tax.

The Tribunal observed that there was no positive evidence of intentional non-payment of service tax, and the mere allegation of suppression was not sufficient to invoke the extended limitation period. Therefore, the demand for service tax for the extended period was set aside. As there was no suppression, penalties under Section 77 and 78 were also overturned under Section 80 of the Act. The appeal was allowed for the limited purpose of calculating the service tax for the normal limitation period on a cum-tax basis. The decision was pronounced in the open court, disposing of the appeal accordingly.