2017 (8) TMI 1225 - AT - Service Tax

Business Auxiliary Services - bonafide belief of non-liability to service tax - time limitation - Held that - there is a bona fide belief on the part of the appellant being an individual is not covered by the tax category of Commercial Concern during the relevant period - in such a situation invoking the charge of suppression, fraud, collusion, etc., is not sustainable. The appellant has made out a case against the demand on the question of time bar - the whole of the demand confirmed by the lower authority is falling within the extended period - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of service tax for rendering taxable services under "Business Auxiliary Services" category.
2. Appellant's belief of non-liability to service tax as an individual providing services.
3. Contesting the demand on the grounds of time bar.
4. Waiver of penalties by the original authority.
5. Appeal against the demand confirmed falling within the extended period.

Analysis:

1. The judgment dealt with the confirmation of a demand of service tax amounting to ?4,01,569 for providing taxable services under the category of "Business Auxiliary Services" between April 2004 and March 2009.

2. The appellant's argument centered around their belief that, as an individual service provider, they were not liable for service tax under the category of "Commercial Concern." The appellant contended that the demand should be set aside based on this belief.

3. The appellant did not contest the demand on its merits but raised the issue of time bar, claiming that the demand covered a period beyond the normal time limit. The appellant sought relief from the demand based on this ground.

4. The original authority had waived all penalties on the appellant under Section 80 of the Finance Act, 1994, acknowledging the appellant's bona fide belief that as an individual, they were not covered under the tax category of "Commercial Concern" during the relevant period.

5. The Tribunal noted that the entire demand confirmed by the lower authority fell within the extended period. Considering this fact, the Tribunal held that the demand was not sustainable and allowed the appeal, ruling in favor of the appellant.

This judgment highlights the importance of considering the beliefs and circumstances of the taxpayer in tax liability cases, especially when determining the applicability of penalties and time limits for demand confirmation.