2017 (9) TMI 894 - AT - Service Tax

Business Support Service - case of the revenue is that under the concession agreement, the appellant provided various facility in relation to commerce to the concessionaire which fall under the category of Business Support Service - whether the service provided by the appellant to the concessionaire is classifiable as Business Support Service and liable for service tax during the relevant period or otherwise? - Held that - As per the plain reading of the definition, it can be seen that any service provided in relation to business or commerce is a support service of business or commerce. In the present case the concessionaire is solely engaged in the commerce i.e. sale of their goods in the premises of the appellant. The appellant provides their branded store duly air-conditioned, with adequate ambience, lighting, common security, various sales schemes to attract the customer. These facilities contribute in the sale of the goods of the concessionaire from the stores of the appellant. Therefore the service of the appellant clearly covered in the first clause of the definition of support services of business or commerce. The scope of this service is not limited but very wide. In our view any service which support the operation of business and commerce of the client covers under the business support services, if it is not specified under the specific classification. As regard consideration, from the concession agreement, it can be seen that the consideration is either in the form of percentage of sale or if the total amount, as per the percentage does not meet to the minimum guaranteed amount then irrespective of percentage the fixed minimum guaranteed amount is charged by the appellant from the concessionaire. This further establish that the arrangement is not of sale-purchase of goods between concessionaire and the appellant but of service. Extended period of limitation - penalty - Held that - before 1-6-2007 appellant neither declared their service nor filed any ST-3 returns declaring the service of Business Support Service, therefore department was completely kept in dark about the provision of service under the category of Business Support Service, therefore there is clear suppression of facts on the part of the appellant, extended period was correctly invoked - penalties imposed are also legal and correct, which do not require any interference. Appeal dismissed - decided against appellant.

Issues Involved:
1. Classification of services provided by the appellant.
2. Applicability of service tax under the category of 'Business Support Services'.
3. Applicability of service tax under the category of 'Renting of Immovable Property'.
4. Invocation of the extended period for demand.
5. Legality of penalties imposed.

Issue-wise Detailed Analysis:

1. Classification of Services Provided by the Appellant:
The core issue was whether the services provided by the appellant to the concessionaire fall under 'Business Support Services' or 'Renting of Immovable Property'. The appellant argued that their activities constituted trading of goods and not provision of services, emphasizing that they paid VAT on the sale price. However, the Tribunal observed that the appellant provided significant infrastructure and facilities, such as store ambience, electricity, security, and air-conditioning, which were essential for the concessionaire's commerce. The Tribunal concluded that these activities were indeed services and classified them under 'Business Support Services'.

2. Applicability of Service Tax under 'Business Support Services':
The Tribunal noted that the appellant's services, including providing a branded store, air-conditioning, lighting, and security, contributed to the concessionaire's business operations. These services were deemed to support the concessionaire’s business, fitting the definition of 'Business Support Services' as per Section 65(104c) of the Finance Act, 1994. The Tribunal emphasized that the service's nature, not the form of consideration, determined its classification.

3. Applicability of Service Tax under 'Renting of Immovable Property':
The appellant contended that they paid service tax under 'Renting of Immovable Property' from 01/06/2007, which the department accepted. However, the Tribunal clarified that the appellant's self-classification did not establish a legal precedent. The Tribunal upheld the adjudicating authority's view that the services provided before 01/06/2007 were correctly classified under 'Business Support Services', irrespective of the later classification.

4. Invocation of the Extended Period for Demand:
The appellant argued that the demand was time-barred, asserting a bona fide belief that their services were not taxable under 'Business Support Services'. The Tribunal found that the appellant did not declare their services or file ST-3 returns for the period before 01/06/2007, constituting suppression of facts. Consequently, the extended period for demand was rightly invoked under the proviso to Section 73(1) of the Finance Act, 1994.

5. Legality of Penalties Imposed:
The Tribunal upheld the penalties imposed, noting that the appellant's failure to declare their services and file necessary returns justified the penalties. The Tribunal found no reason to interfere with the adjudicating authority's decision on penalties.

Conclusion:
The Tribunal concluded that the appellant provided 'Business Support Services' during the relevant period, making them liable for service tax. The classification of services under 'Renting of Immovable Property' from 01/06/2007 did not alter the nature of services provided earlier. The extended period for demand was validly invoked due to the appellant's suppression of facts, and the penalties imposed were upheld. The appeal was dismissed, affirming the adjudicating authority's order.

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