2016 (12) TMI 166 - AT - Service Tax

Extended period of limitation - Registrar and share transfer agent service - service was included in the statute took w.e.f. 01/5/06 - brokerage/incentive - fees for share transfer agent service - time bar - Held that - for invoking extended period of limitation mere failure on the part of the assessee to pay the tax or file the prescribed Returns is not sufficient. It has to be proved that the assessee was aware that he is liable of pay service tax and he deliberately evaded to pay the tax or the facts required to be disclosed to the revenue authorities were not deliberately and consciously disclosed to the revenue authorities. In the present proceedings only a few allegations have been made without adducing the evidence to support the allegations. The initial burden of proving that the situations visualized by proviso to Section 73 (1) has, thus, not been discharged. It is, therefore, unjust and unreasonable to invoke the extended period of limitation. No evidence has been brought on record that the assessee has deliberately evaded service tax by over utilizing the Cenvat credit. Hence this is a case where only normal time limit will be available to the Revenue for demand of service tax under Section 73 - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Time bar for service tax demand raised by Revenue.
2. Applicability of service tax on brokerage/incentive and share transfer agent fees.

Issue 1: Time bar for service tax demand raised by Revenue

The appeal was filed by Revenue against an order-in-original dated 05/5/2011, where the service tax demand raised by Revenue was dropped due to time bar. The demand was related to the period 10/9/04 to 31/3/06, and the impugned order dropped the demands on both counts on account of time bar. Revenue challenged this order on the ground that the tax evasion could have remained undetected but for the audit of the assessee by service tax officials. The Revenue claimed that the assessee failed to file the ST-3 returns, showing an intention to evade payment of service tax. However, the Commissioner set aside the demand on the ground of time bar, emphasizing the need for evidence to prove intentional evasion for invoking the extended period of limitation. The Commissioner highlighted that mere failure to pay tax is not sufficient to invoke the extended period of limitation, and intentional evasion must be proven with evidence. The Commissioner referred to legal precedents to support the requirement of a guilty mind or mens-rea on the part of the defaulter for invoking the extended period of limitation. As no evidence was presented to prove intentional evasion, the Commissioner upheld the order dropping the demands on the ground of time bar.

Issue 2: Applicability of service tax on brokerage/incentive and share transfer agent fees

The demand for service tax was raised against the assessee for receiving brokerage/incentive in respect of Initial Public Offering (IPO) and acting as a share transfer agent for certain companies during the period prior to 01/5/06. The assessee started paying service tax under the category of Registrar and share transfer agent from 01/5/06. The Revenue contended that these services should be liable to service tax under the category of Business Auxiliary Service for the period before 01/5/06. However, the assessee argued that no service tax could be levied on these services for the period before 01/5/06, citing Tribunal decisions in similar cases. The Tribunal held that a service is liable to service tax only from the date it is brought into the statute, and for the period prior to that date, service tax cannot be levied under any other service category. The Tribunal agreed with the assessee's argument and set aside the demand made for the period prior to 01/5/06. The Tribunal emphasized that service tax liability arises only from the date a service is included in the statute, as established by legal precedents cited in the case. Consequently, the demand made by Revenue for the period before 01/5/06 was set aside on merits.

In conclusion, the judgment upheld the order dropping the service tax demands on the ground of time bar and set aside the demand made by Revenue for the period before 01/5/06 regarding brokerage/incentive and share transfer agent fees. The decision was based on the principles of intentional evasion required for invoking the extended period of limitation and the liability of service tax only from the date a service is brought into the statute.