2017 (3) TMI 788 - AT - Service Tax

Tax liability - amounts received as parking fee from the users of parking space in the property - amounts received as renovation charges from various occupants of the property as and when certain renovation are carried out by any of the occupants of the property - demand on the ground of Non-payment of service tax - time limitation - Held that - the impugned order did not give categorical finding after examining the documents and evidence submitted by the respondent/ assessee. It is necessary to give a clear finding regarding the nature of activity undertaken by the respondent/assessee, the consideration received for such activity which is liable to service tax - matter on remand. Time limitation - demand held as time barred only on the ground that the SCN was issued after 1 years of audit - Held that - the relevant date u/s 73 (1) of the FA, 1994 is with reference to the date of filing return etc. The normal period or extended period is determined based on the provisions contained therein. If the ingredients for invoking demand for extended period are available, then such demand can be raised for 5 year period. The date of knowledge of the Department is not relevant in such situation - time limitation not invocable - this matter also needs reconsideration. Appeal allowed by way of remand.

Issues:
1. Time bar for issuing demand based on audit objection.
2. Tax liability related to parking fee and renovation charges.
3. Legal provisions under Section 73 (1) of the Finance Act, 1994.
4. Interpretation of the term "relevant date" in the context of time bar for issuing notice.
5. Application of legal principles in determining the period for issuing notice.
6. Examination of documents and evidence submitted by the respondent/assessee.
7. Consideration of service tax liability on parking fee and renovation charges.

Issue 1: Time bar for issuing demand based on audit objection
The Revenue appealed against the finding of the Commissioner (Appeals) regarding time bar for issuing a demand. The Revenue argued that the audit of the respondent/assessee's accounts was conducted in August 2007, and the show cause notice was issued after 1½ years of the audit, invoking the extended period. The Revenue contended that the demand cannot be considered time-barred based solely on the timing of the show cause notice. The Revenue cited legal precedents to support its argument, emphasizing that the knowledge of the Department is not a determining factor for the period of issuing a notice. The Tribunal agreed with the Revenue, stating that the relevant date for determining the period of issuing a notice is defined in Section 73 (1) of the Finance Act, 1994, and the Department's knowledge is not relevant in this context.

Issue 2: Tax liability related to parking fee and renovation charges
The dispute in the case revolved around the non-payment of service tax by the respondent/assessee on amounts received as parking fees and renovation charges. The Original Authority upheld the service tax liability for the period 2005-2006 and 2006-2007. On appeal, the Commissioner (Appeals) set aside the order primarily on the grounds of time bar. The respondent/assessee argued that the parking fee should not be subjected to service tax, citing a decision by the Delhi High Court. Regarding renovation charges, the respondent/assessee contended that these charges were for extra consumption of water and electricity during renovation activities and not for providing any specific service.

Issue 3: Legal provisions under Section 73 (1) of the Finance Act, 1994
The learned AR for the Revenue argued that the Commissioner (Appeals) erred in applying the legal provisions of Section 73 (1) regarding the time bar for issuing a demand. The AR emphasized that the time period for issuing a demand is based on the "relevant date" as defined in the said section, and the Department's knowledge is not a determining factor for issuing a notice. The Tribunal agreed with the AR's submissions and cited relevant legal precedents to support the interpretation of Section 73 (1).

Issue 4: Interpretation of the term "relevant date" in the context of time bar for issuing notice
The Tribunal analyzed the term "relevant date" in the context of determining the period for issuing a notice. Citing a decision by the Hon'ble Gujarat High Court, the Tribunal emphasized that the concept of knowledge by the Department is not relevant in determining the period for issuing a notice. The Tribunal highlighted that the period of limitation should be reckoned backward from the date of the show cause notice, as established by legal precedents.

Issue 5: Application of legal principles in determining the period for issuing notice
The Tribunal reiterated that the knowledge and awareness of the Department are not relevant factors for invoking the extended period of time for issuing a notice. Legal precedents were cited to support the position that the extended period of limitation can be justified in cases of non-levy or short-levy of duty with an intention to evade payment, irrespective of the Department's knowledge.

Issue 6: Examination of documents and evidence submitted by the respondent/assessee
The Tribunal noted that the impugned order did not provide a categorical finding after examining the documents and evidence submitted by the respondent/assessee. It emphasized the importance of thoroughly examining all relevant documents to determine the nature of the activity undertaken by the respondent/assessee and the consideration received for such activity liable to service tax.

Issue 7: Consideration of service tax liability on parking fee and renovation charges
The Tribunal concluded that the impugned order could not be sustained due to the legal untenability of the Commissioner (Appeals)'s reasoning on time bar. The case was remanded back to the Commissioner (Appeals) for a fresh examination of both the merit and time bar issues. The Tribunal directed that adequate opportunity should be provided to the respondent/assessee to present their case, keeping all issues open for a fresh decision.

This detailed analysis of the judgment provides a comprehensive overview of the legal issues involved and the Tribunal's reasoning and decisions on each matter.

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