2016 (5) TMI 749 - AT - Service Tax

Extended period of limitation - Photography Service - Wilful misstatement and suppression of facts - Appellant admitted that it was engaged in the activity of image editing but did not give any printed photograph to the customers and only loaded the images on a CD which was given to the customers for getting the photos printed elsewhere, therefore there was no photography services rendered. Held that - it is not even necessary to quibble much over the scope of the word photography because the appellants clearly were engaged in taking or processing of photographs and were clearly covered under the scope of definition of photography studio or agency and they clearly provided service in relation to photography. Indeed the position is so unambiguous that there was no scope for any possibility of a reasonable person operating in an appropriate environment to entertain any confusion, leave alone belief, that the impugned service was not covered under photography service. It is pertinent to mention that bona fide belief is the belief of a reasonable person operating in an appropriate environment and is not some sort of hallucinatory belief. - Demand confirmed invoking the extended period of limitation - Decided against the assessee.

Summary

Issues:
Service tax demands upheld for two companies for alleged wilful misstatement and suppression of facts regarding photography services.

Analysis:
The appeals were filed against orders-in-appeal upholding service tax demands against two companies for providing photography services without paying service tax. The first company contended that it only provided image editing services and did not print photographs, while the second company claimed to mend and scan old photographs without printing them. Both companies argued that their services did not fall under the definition of photography. However, the tribunal referred to the definition of a photography studio or agency under Section 65(79) of the Act, which includes professional photographers or commercial concerns engaged in photography services. The tribunal noted that even if the companies did not provide printed photographs but only loaded images on a CD, they still fell under the definition of a photography studio or agency, as they were engaged in taking or processing photographs. The tribunal emphasized that the companies clearly provided services in relation to photography and were covered under the scope of photography services.

The tribunal further clarified that the companies' contention of being under a reasonable belief that their services were not taxable was untenable. It stated that a reasonable belief is based on the perspective of a reasonable person in an appropriate environment and not a hallucinatory belief. Therefore, the extended period for tax assessment was deemed applicable along with its consequences. Ultimately, the tribunal found no infirmity in the impugned orders to warrant appellate intervention and dismissed the appeals.