2016 (9) TMI 742 - AT - Service Tax

Business Auxiliary Services - receipt of brokerage - The assessee acted as an intermediary between the two working companies in connection with the transfer of title of equipment and machineries. - Extended period of limitation - Held that - Supreme Court in the case of Coaltar Chemicals Manufacturing Co. Vs. Union of India 2003 (10) TMI 52 - SUPREME COURT OF INDIA has held that for invoking the suppression clause for demand of duty under the time bar, there has to be something positive other than mere erection or failure on the part of the manufacturer or conscious or deliberate withholding of information. We find this not to be case in the present proceedings. The Tribunal has also held time and again that once information is declared in the balance sheets of the company, allegation of suppression of such information is not sustainable inasmuch as balance sheet of companies are publicly available documents. - Demand set aside - Decided in favor of assessee.

Summary

Issues:
Charging of service tax on the assessee under Business Auxiliary Services category, time bar for demanding service tax, whether the assessee acted as a commission agent, suppression of fact by the assessee.

Analysis:
The judgment pertains to a dispute regarding the imposition of service tax on the assessee under the category of Business Auxiliary Services. The Original Adjudicating Authority confirmed the demand for service tax, which was introduced w.e.f. 16/06/2009. However, the Commissioner (Appeals) set aside the demand under the time bar, stating that the department was aware of the brokerage collection by the assessee during an audit in December 2005.

Both the authorities below analyzed the agreement between the assessee and the service receiver and concluded that the assessee acted as a commission agent, falling under the definition of Business Auxiliary Services as per Section 65 (19) of the Finance Act, 1994. The service tax was deemed applicable on the brokerage received by the assessee. The Commissioner (Appeals) based the decision on the time bar aspect.

The controversy arose during an audit in December 2007 when the brokerage receipt from 2005 was noted. It was revealed that the issue was not raised during an annual audit in 2005, and no action was taken to recover the service tax. The brokerage receipt was also disclosed in the company's published balance sheets. The Commissioner (Appeals) found no suppression of facts by the assessee, leading to the demand being set aside.

The judgment cited the Supreme Court's ruling in Coaltar Chemicals Manufacturing Co. Vs. Union of India, emphasizing that mere failure or omission does not constitute suppression unless there is positive evidence of deliberate withholding of information. The Tribunal's precedent highlighted that information declared in a company's balance sheet is not considered suppressed information as balance sheets are publicly available documents.

The Tribunal referred to a recent decision in Indian Hotels Co. Ltd. Vs. Commissioner of Service Tax, Mumbai-I to support the view that once information is disclosed in balance sheets, allegations of suppression are not sustainable. Consequently, the Tribunal upheld the Commissioner (Appeals)'s decision, dismissing the Revenue's appeal on 17/8/2016.