2017 (5) TMI 1346 - AT - Service Tax

Reverse Charge Mechanism - services received from abroad - time limitation - Held that - the SCN dated 05.01.2011 was issued by invoking the extended period in respect of the services received by the respondent from service provider situated abroad and the very same services also disputed in the second SCN and it was informed that the said SCN has not reached its logical conclusion. Scope of second SCN - Held that - once an audit report was issued and base on that report, SCN dt. 05.01.2011 issued invoking extended period, second SCN dated 11.04.2012 could not have been issued demanding service tax by invoking extended period on the said audit report. Appeal dismissed - decided against Revenue.

Summary

Issues:
Revenue's appeal against dropping of demands for the extended period by the adjudicating authority based on two show cause notices, invoking extended period, and liability under section 66A of Finance Act, 1994.

Analysis:

1. Extended Period Invocation:
The appeal concerned the issuance of two show cause notices by the revenue authority to the respondent for payment of service tax for the period 2007-08 to 2011-12. The first notice dated 05.01.2011 invoked the extended period, followed by a second notice on 11.04.2012. The adjudicating authority dropped the demands raised by the second notice for the period prior to October 2010, stating that invoking the extended period in the second notice was inappropriate as it was already invoked in the first notice. The revenue argued that the second notice superseded the first, justifying the extended period invocation. However, the tribunal found that the second notice's invocation of the extended period was beyond the limitation period and not based on new facts, leading to the rejection of the appeal.

2. Audit Report Reliance:
The tribunal highlighted that the second show cause notice relied on audit paras mentioned in the first notice. It emphasized that once an audit report formed the basis for invoking the extended period in the initial notice, the same grounds could not be used again in a subsequent notice. This repetition of grounds without new facts or circumstances did not justify the extended period invocation in the second notice. The tribunal considered this repetition as a key factor in upholding the adjudicating authority's decision to drop the demands raised in the second notice.

3. Legal Analysis and Precedents:
The tribunal extensively quoted the Order-in-Original's findings, emphasizing that the department's actions lacked justification for invoking the extended period in the second notice. It referenced legal precedents such as the Hyderabad Polymers case and Nizam Sugar Factory case to support the decision. The tribunal concurred with the adjudicating authority's reasoning that the demands beyond the normal period were time-barred and should be dropped. By aligning with the previous judgments and legal principles, the tribunal reinforced the importance of adherence to procedural requirements and limitations in tax matters.

4. Conclusion:
After thorough consideration of the arguments presented by both parties and a detailed review of the case records, the tribunal concluded that the adjudicating authority's decision to drop the demands raised in the second show cause notice was legally sound. The tribunal rejected the appeal, emphasizing the lack of merit in challenging the impugned order. The judgment underscored the significance of procedural compliance, consistency in invoking extended periods, and adherence to legal precedents in tax dispute resolutions.

This comprehensive analysis encapsulates the key aspects of the judgment, addressing the issues raised in the appeal and the tribunal's rationale for upholding the adjudicating authority's decision.