2017 (4) TMI 153 - AT - Service Tax

Extended period of limitation - non-payment of service tax - Held that - The material facts, of the nature of service rendered by the appellant, the tax liability on such services were all in the knowledge of the Department. Timely follow up was not done for subsequent periods and that cannot be the basis for issuing another demand invoking suppression of fact etc - extended period not invoked. Imposition of penalties u/s 77 - Held that - the SCN never proposed imposition of penalty under various sub-section/sub-clauses of Section 77 and the Original Authority traveled beyond the scope of SCN in imposing various penalties under the said section - penalties set aside. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Sustainability of demand for service tax for the extended period.
2. Legality of penalties imposed under Section 77.

Analysis:

Issue 1: Sustainability of demand for service tax for the extended period
The case involved the appellant, engaged in outdoor catering services, facing a demand for non-payment of service tax for the period 2005-2006 to 2009-2010. The Commissioner (Appeals) restricted the demand to August 2009 and September 2009, amounting to ?1,31,362. The Revenue challenged this decision, arguing that the demand for the extended period was legally sustainable. The Revenue contended that the appellant did not cooperate, failed to file statutory returns, and collected service tax from clients. The Tribunal noted that earlier proceedings were initiated against the appellant for the period 10/09/2004 to 31/10/2006. The impugned order found that the demand for the period up to October 2006 was already raised in a previous show cause notice, making the subsequent demand repetitive and not sustainable. The Tribunal upheld the Commissioner's decision, citing relevant case law and the knowledge of the tax authorities regarding the appellant's activities.

Issue 2: Legality of penalties imposed under Section 77
The penalties imposed under Section 77 were reduced to ?1,000 in the impugned order. The Revenue argued that the Original Authority exceeded the scope of the show cause notice in imposing penalties under Section 77. The Tribunal found no legal infirmity in the impugned order's decision to reduce the penalty for non-registration to ?1,000. The Tribunal dismissed the Revenue's appeal, stating that the penalties imposed under Section 77 were appropriately reduced in the impugned order.

In conclusion, the Tribunal upheld the Commissioner (Appeals)'s decision regarding the sustainability of the demand for service tax for the extended period and the reduction of penalties under Section 77. The appeal by the Revenue was dismissed, and the order was pronounced on 31/03/2017.