2017 (7) TMI 686 - AT - Service Tax

Air travel agency service - short payment of tax - demand - Held that - the Revenue authorities may not be aware that the respondent is not discharging the service tax liability from July 2001 to March 2005 in the absence of any returns filed by the respondent. It is on record that the respondent had not filed any returns for the period July 1997 to June 2001 as also for subsequent period - In the absence of any returns filed with the Revenue authorities Revenue authorities will not be able to ascertain whether tax liability is correctly discharged or otherwise and hence in our view the show-cause notice dt. 08/12/2005 is correctly invoking the extended period for demand of tax. The second show-cause notice dt. 08/12/2005 is issued for the period subsequent to the period which was in question in show-cause notice dt. 08/10/2002. It transpires from record that there is no overlapping of the demand in order to claim the relief by the respondent. Impugned order set aside - appeal allowed - decided in favor of appellant.

Issues:
1. Extended period for demand of service tax liability.
2. Applicability of previous adjudication on current show-cause notice.
3. Discharge of service tax liability by the respondent.
4. Filing of returns by the respondent.
5. Overlapping of demand in subsequent show-cause notice.

Extended period for demand of service tax liability:
The case involved a dispute regarding the invocation of an extended period for the demand of service tax liability under the head air travel agency service for the period from July 2001 to March 2005. The Revenue authorities issued a show-cause notice on 08/12/2005 for this demand. The first appellate authority set aside the order based on the argument that the appellant had disclosed their activity to the department before the issuance of the show-cause notice, citing legal precedents. However, the appellate tribunal disagreed, stating that the absence of filed returns prevented the Revenue authorities from ascertaining the correct discharge of tax liability, justifying the invocation of the extended period for demand.

Applicability of previous adjudication on current show-cause notice:
The respondent argued that a previous show-cause notice issued for the period July 1997 to June 2001, which was adjudicated in 2004, indicated that the department was aware of the non-discharge of service tax liability. The first appellate authority relied on legal precedents and set aside the show-cause notice issued in 2005. However, the appellate tribunal found that the subsequent show-cause notice was for a period not covered by the previous adjudication, and there was no overlapping of demand to claim relief, thus rejecting the respondent's argument based on the previous adjudication.

Discharge of service tax liability by the respondent:
The Revenue authorities contended that the respondent had not discharged any tax liability from July 2001 onwards despite being registered. The first appellate authority had set aside the show-cause notice based on the argument that the department was aware of the non-discharge of tax liability. However, the appellate tribunal found that the absence of filed returns prevented the authorities from confirming the correct discharge of tax liability, leading to the reinstatement of the Order-in-Original by the adjudicating authority.

Filing of returns by the respondent:
It was noted that the respondent had not filed any returns for the period July 1997 to June 2001 or subsequent periods. The absence of filed returns hindered the Revenue authorities from verifying the correct discharge of tax liability, emphasizing the importance of filed returns for tax assessment purposes.

Overlapping of demand in subsequent show-cause notice:
The respondent's counsel argued that the subsequent show-cause notice did not overlap with the period covered by the previous adjudication, and therefore, the show-cause notice issued in 2005 should be set aside. However, the appellate tribunal found that there was no overlapping of demand, rejecting the argument based on legal precedents cited by the respondent's counsel. The tribunal reinstated the Order-in-Original passed by the adjudicating authority, setting aside the impugned order.

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