2017 (3) TMI 939 - AT - Service Tax

Airport service - sale of entry ticket at the airport as per the agreement entered into with Airport Authority of India - demand - time limitation - Held that - the said short payment of service tax could be detected only when authorised person of the appellant s company was questioned and his statement was recorded on 08.11.2005 and the department had occasion to scrutinise the agreement with their port authority. On the basis of the details submitted by the appellant on 18.10.2007, the department quantified the service tax recoverable. In fact, in terms of the agreement with the Airport Authority of India the appellant was allowed to recover the entry charges alongwith service tax. The Airport Authority of India also have clarified the issue to the appellant regarding payment of service tax - the extended period of limitation has been rightly invoked. The proviso to Section 73 of the FA, 1994 empowers the department to demand service tax within a period of five years from the date of issue of notice in cases where suppression of facts is established - present SCN has been issued more than three years after the date of knowledge of the short payment of service tax by the department - demand valid. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Time-barred show cause notice
2. Discrepancy in service tax amount demanded
3. Liability for service tax on airport services

Analysis:

Issue 1: Time-barred show cause notice
The appellant contended that the show cause notice issued on 04.03.2008 was time-barred as the department became aware of the non-payment in 2005, and the notice was issued more than three years later. The appellant argued that since they registered for service tax in March 2005 and started paying tax from 02.03.2005, the notice was untimely. However, the Revenue invoked the extended period of limitation under Section 73 of the Finance Act, citing that the short payment was only detected after questioning an authorized person in the company in November 2005. The Tribunal agreed that the extended limitation period was rightly invoked based on the facts presented.

Issue 2: Discrepancy in service tax amount demanded
The appellant raised concerns about the discrepancy in the service tax amount demanded, as the confirmed tax in the order exceeded the initial demand in the show cause notice. Despite this, the Tribunal did not find this argument substantial, and the Revenue's position was supported based on legal precedents allowing flexibility in the amount demanded during the adjudication process.

Issue 3: Liability for service tax on airport services
The core issue revolved around the liability of the appellant for service tax on airport services. The appellant collected airport admission ticket charges under an agreement with the Airport Authority of India. The Tribunal referred to a Supreme Court judgment in a similar case, where it was established that the appellant, acting as a collecting agent, was not the service provider, and the ultimate liability rested with the Airport Authority of India. Therefore, the Tribunal upheld the demand for service tax on the appellant's activity as an airport service, in line with the Supreme Court's authoritative pronouncement.

In conclusion, the Tribunal dismissed the appeal, upholding the impugned order, and confirmed the liability of the appellant for service tax on airport services based on legal interpretations and precedents cited during the proceedings.