2017 (6) TMI 908 - AT - Service Tax

Extended period of limitation - Commission to overseas commission agent - reverse charge mechanism - Held that - As the issue of payment of service tax was in dispute, therefore, there is no malafide intention of the appellant in not paying the service tax - extended period not invocable - penalty also set aside - demand restricted to normal period - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
1. Applicability of service tax on commission paid to overseas agent under reverse charge mechanism.
2. Invocation of the extended period of limitation.
3. Contradictory findings in the order of the Commissioner (Appeals).

Analysis:
1. The case involved the payment of commission to overseas commission agents and the demand for service tax under the reverse charge mechanism for the period 2003-04 to 2006-07. The appellant challenged the imposition of service tax, interest, and penalty. The Commissioner (Appeals) held that prior to 18.04.2006, the appellant was not required to pay service tax on the commission paid to overseas agents under the reverse charge mechanism, citing a relevant court decision. However, the Commissioner confirmed the rest of the demand. The appellant contested this decision.

2. The appellant argued that there was no malafide intention in not paying the service tax, and therefore, the extended period of limitation should not be invoked. The Tribunal noted that the Commissioner (Appeals) had considered the merits of the case and provided relief for the period up to 18.04.2006 based on the court decision. Since the issue of service tax payment was disputed, the Tribunal held that there was no malafide intention on the part of the appellant. Consequently, the extended period of limitation was deemed inapplicable. The Tribunal confirmed the demand for service tax for the normal period but set aside the demand for the remaining period. No penalty was imposed due to the absence of malafide intention.

3. In conclusion, the Tribunal disposed of the appeal by confirming the demand for service tax for the normal period, setting aside the demand for the remaining period, and ruling out the imposition of any penalty due to the absence of malafide intention on the part of the appellant.