2017 (11) TMI 480 - AT - Service Tax

Business Auxiliary Services - whether the appellant is liable to pay service tax on commission and other amounts received from the service recipient M/s. Air India/ Indian Airlines under the taxable category of Business Auxiliary Service? - Held that - the issue is no more res integra, in view of the decision of this Tribunal in the case of Patel Air Freight , wherein it has been held that the commission received from the Airlines for providing services connected with air cargo, is liable for service tax under the category of BAS. Extended period of limitation - Held that - contravention of the statutory provisions and non-payment of Service Tax was not intentional and there is no element of fraud, suppression etc., in order to evade payment of tax - in absence of the ingredients mentioned in the proviso to Section 73 (1) of the Finance Act, 1994, the Service Tax demand should be restricted to the normal period of one year only. For quantifying the adjudged demand within the normal period, the matter should go back to the original authority - appeal allowed by way of remand.

Summary

Issues:
Interpretation of services provided by the appellant under Business Auxiliary Service, invocation of extended period of limitation for service tax demand, involvement in activities defrauding Government Revenue.

Analysis:
The appeal challenged an order passed by the Commissioner (Appeals), Central Excise, Delhi, confirming a service tax demand against the appellant, who acted as an air cargo agent for various airlines. The Department contended that the services provided by the appellant fell under the taxable category of Business Auxiliary Service. The original authority confirmed a service tax demand along with penalties, which was later modified by the Commissioner (Appeals). The appellant argued that they were not involved in promotional activities and that the show cause proceedings were time-barred. The appellant cited previous Tribunal decisions to support their arguments against the invocation of the extended period of limitation.

The Tribunal noted that the issue of liability to pay service tax on commission received from airlines for air cargo services had been settled in previous cases. However, it observed that the authorities had not specifically discussed the appellant's involvement in activities defrauding Government Revenue. The Tribunal highlighted the importance of the proviso to Section 73(1) of the Finance Act, 1994, which limits the period for service tax demand in cases of fraud, suppression, etc. The Tribunal referred to the adjudicating authority's observations and concluded that the extended period of limitation could not be invoked in the absence of intentional contravention or fraud to evade tax.

Based on the above analysis, the Tribunal found that the part of the adjudged demand was barred by limitation of time as the show cause notice was issued without proper substantiation regarding the ingredients under Section 73(1). Therefore, the Tribunal set aside the impugned order and remanded the matter to the original authority for re-quantification of the adjudged demand within the normal period of limitation. The appeal was allowed in favor of the appellant, emphasizing the importance of fulfilling statutory obligations and the limitations on invoking the extended period for service tax demands.