2016 (6) TMI 723 - AT - Service Tax

Business Auxiliary Service (BAS) - Activity of getting investments in mutual funds on commission basis - the contention that the appellant was an individual and hence not liable to service tax during the relevant period - commercial concern - Held that - the appellant was a proprietary concern and not an individual. It is trite to say that a proprietary concern rendering the said service is a commercial concern. Validity of demand beyond normal period where the penalty was waived invoking section 80 - Held that - invocation of Section 80 ibid cannot necessary imply that there was no suppression or wilful mis-statement. Once there is suppression, extended period is invocable even if Section 78 ibid penalty is not imposed by virtue of Section 80 ibid. Demand of service tax with penalty confirmed - Decided against the assessee.

Summary

Issues:
1. Liability of an individual to pay service tax as a commercial concern.
2. Invocation of Section 80 of the Finance Act, 1994 and its impact on the extended period for confirmation of demand.

Analysis:
1. The appeal was filed against the Order-in-Appeal upholding the service tax demand on the appellant for providing Business Auxiliary Service (BAS) in the form of getting investments in mutual funds on a commission basis without paying service tax. The appellant argued that as an individual, he was not liable to pay service tax during the relevant period, citing Section 65 (105) (zzb) of the Finance Act, 1994, which taxes services rendered by commercial concerns. However, it was established that the appellant, operating under a proprietary concern, was indeed a commercial concern, making him liable for service tax. The Tribunal affirmed that a proprietary concern rendering the service qualifies as a commercial concern under the law.

2. The appellant contended that once Section 80 of the Finance Act, 1994 was invoked to set aside penalties, the extended period for confirmation of demand could not be applied. The lower authorities had found suppression of facts, leading to the demand. The Tribunal analyzed this issue and clarified that the invocation of Section 80 does not preclude the application of the extended period for confirming the demand. Section 80 provides relief from penalties under certain conditions but does not automatically negate the possibility of suppression or misstatement. In cases of suppression, the extended period can be invoked even if penalties under Section 78 are not imposed due to Section 80. The Tribunal cited previous decisions to support this interpretation. Consequently, the Tribunal upheld the impugned order, dismissing the appeal.

In conclusion, the judgment clarified the liability of an individual operating a proprietary concern to pay service tax as a commercial concern and explained the interplay between Section 80 of the Finance Act, 1994 and the extended period for confirming demands. The Tribunal's decision was based on a thorough analysis of the legal provisions and precedents, ultimately dismissing the appeal against the service tax demand.