2008 (11) TMI 152 - AT - Service Tax

Whether the demand of service tax for the period from 10-9-2004 to 28-2-2005 is barred by time or not - Respondents took out the registration in September 2004 but paid tax on 16-6-2005 when there was further amendment to the definition of Business Auxiliary Service assessee had a bona fide belief that their activity would not subject to service tax with effect from 10-9-2004 i.e. date of earlier amendment - Respondents had informed the Department even in the year 1998 all the processes undertaken by them - no suppression of facts for invocation of the extended period

Summary

Issues:
- Whether the demand of service tax for a specific period is barred by time or not.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals-II), Bangalore. The main issue in this case was whether the demand of service tax for the period from 10-9-2004 to 28-2-2005 was barred by time. The Commissioner (Appeals) had concluded that the show cause notice was issued beyond the normal period of limitation. Despite acknowledging that the confirmation of demand would be sustainable on merit, the Commissioner dropped the demand due to the limitation issue. The Commissioner considered various factors, including the Respondents informing the Department of their processes in 1998, filing periodical returns, and previous adjudication orders that indicated no suppression of facts.

The Revenue was dissatisfied with the Commissioner's decision and argued that the Respondents could not rely on a letter from 1998, as the service tax on 'Business Auxiliary Service' was introduced in 2003, and the letter was irrelevant to the current appeal. The Revenue emphasized that the Respondents had registered for service tax in 2004 and should have fulfilled their tax liability. The Revenue contended that the mere registration did not absolve the Respondents from suppressing facts. The Revenue urged for the impugned order to be set aside and the Order-in-Original to be upheld.

On the other hand, the Advocate for the Respondents highlighted the statutory provisions and the timeline of events. The Respondents had registered in September 2004, but subsequent amendments clarified their service tax liability. The Advocate argued that the Respondents genuinely believed their activity was not taxable until a later amendment in 2005. The Advocate pointed out that the Respondents had informed the Department of their activities in 1998 and that the Commissioner (Appeals) had correctly concluded that there was no suppression of facts. After reviewing all the records, the Member (T) found no merit in the Revenue's appeal and upheld the Commissioner's decision, stating that it was legal and correct. Therefore, the Revenue's appeal was rejected.