2017 (1) TMI 1078 - AT - Service Tax

Business Auxiliary services - a proprietor firm owned by an individual lady, who was engaged in purchasing and selling of goods - commission agent service - demand of tax with interest and penalty - invocation of extended period of limitation - Held that - similar issue was the subject matter of Tribunal decisions in the case of Pratap Singh Jyala vs. CCE Merut II 2015 (12) TMI 819 - CESTAT NEW DELHI wherein it was observed that whether individual concern are to be treated as commercial concern, was the matter of interpretation, in which extended period of limitation would not apply. Also, when the balance sheet contents mention all the consideration received, no suppression or malafide can be attributable to the assessee so as to invoke the longer period of limitation. The fact that the appellant was a proprietorship unit and there was lot of confusion about their tax / obligation read with the fact that all the activities were reflected in the balance sheet, we are of the view that the demand raised beyond the normal period of limitation is time barred - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confirmation of Service Tax, interest, and penalties against the appellant.
2. Whether the appellant, a proprietor firm, was liable to pay Service Tax.
3. Applicability of extended period of limitation for demand raised.

Analysis:
1. The Tribunal confirmed the Service Tax liability of ?1,20,652 along with interest and penalties under sections 76, 77, and 78 of the Finance Act, 1994 against the appellant, a proprietor firm engaged in purchasing and selling goods manufactured by another company. The Revenue treated the appellant's service as commission agent service falling under Business Auxiliary services, leading to the demand raised for the period July 2004 to March 2007.

2. The appellant contended that as an individual lady owning the proprietor firm, and reflecting all activities in the balance sheet, there was no requirement to pay Service Tax. Citing various Tribunal decisions and Board's Circulars stating individuals cannot be treated as commercial concerns, the appellant argued against the liability. The Tribunal referred to the case of Pratap Singh Jyala vs. CCE Merut II, where it was observed that determining individual concerns as commercial concerns involved interpretation and did not warrant the extended period of limitation. Considering the appellant's activities being transparent in the balance sheet and lack of malafide intent, the Tribunal held that no suppression or malafide could be attributed, thus ruling the demand beyond the normal limitation period as time-barred.

3. In conclusion, the Tribunal set aside the impugned order, allowing the appeal with consequential relief, emphasizing that the demand raised beyond the normal limitation period was time-barred due to the confusion regarding the appellant's tax obligations and the transparent reflection of all activities in the balance sheet. The judgment was pronounced on 23/12/2016 by the Tribunal comprising Ms. Archana Wadhwa, Member (Judicial), and Mr. V Padmanabhan, Member (Technical).