2017 (3) TMI 561 - AT - Service Tax

Charitable trust - Validity of subsequent SCN - whether it is open to Revenue to issue SC for the second time invoking the extended period, especially for the period 1.4.2006 to 20.12.2007 i.e. the period falling after the period covered in the earlier SCN and the date of issue of the said SCN? - Held that - deliberate defiance and the intention to avoid and evade the taxes were noticed - extended period has been rightly invoked The appellant did not reply to various communications from more than one and half years and did not file the Service Tax return also - section 80 could not be invoked - penalty u/s 78 upheld - appeal dismissed - decided against appellant.

Summary

Issues:
Confirmation of demand by lower authorities, Invocation of extended period of limitation for show-cause notices, Appropriation of paid amount against total demand, Charitable trust status and obligations, Invocation of Section 80 and Section 78 of the Finance Act, 1994.

Analysis:
The appeal was filed against the confirmation of demand by lower authorities. The appellant argued that they provided Mandap Keeper services and were issued show-cause notices demanding Service Tax for specific periods invoking extended limitation periods. The appellant contended that the Revenue could not issue a second show-cause notice invoking the extended period for a period already covered in the earlier notice. They highlighted payment of a significant amount during the period in question. The Order-in-Appeal confirmed an amount exceeding the total demand, leading to the argument that the order went beyond the scope of the show-cause notice. The appellant, being a charitable trust, sought waiver of penalty due to the circumstances of the case.

The Tribunal noted discrepancies in the show-cause notice and the Order-in-Original, leading to the setting aside of the confirmed amount already paid by the appellant. However, the appropriation of this amount against the total demand was upheld. Despite the charitable trust status, the Tribunal observed delays and non-compliance by the appellant in fulfilling Service Tax obligations, leading to the invocation of the extended period of limitation. While charitable trusts are usually viewed favorably under Section 80 of the Finance Act, 1994, the deliberate defiance and evasion of taxes by the appellant led to the imposition of penalties under Section 78 of the Act.

In conclusion, the Tribunal partially allowed the appeal by setting aside the confirmed amount already paid by the appellant but upholding the appropriation of this amount against the total demand. The invocation of penalties under Section 78 of the Finance Act, 1994 was upheld due to the appellant's intentional avoidance of tax obligations and non-compliance despite being a charitable trust. The judgment was pronounced on 10.02.2017.