2017 (12) TMI 22 - AT - Service Tax

Extended period of limitation - Valuation - appellants discharged service tax only on the service charges received from the client organisations and have not included the salary of the guards and other amounts received for the said service - demand dated 15.5.2013 - Held that - the said demand is the third time demand and on same subject. Two other earlier demands have already been issued to the appellants. It is a settled principle that the demand on the same set of facts cannot invoke the extended period. The demand dated 20.6.2008 has been issued within normal period. Hence there is no dispute on limitation. Demand dated 12.10.2007 which is the first demand was issued invoking extended period. Considering that the appellants got registered only in 2004 and discharged service tax only on part of consideration, we find that the demand for differential service tax is sustainable for the whole of the period as confirmed by the lower authorities - it is a fit case for invoking the provisions of Section 80 to waive the penalties imposed on the appellants. The demand raised by notice dated 15.5.2013 is hit by limitation - demand raised in other two notices and confirmed by the lower authorities are upheld - penalties waived - appeal allowed in part.

Summary

Issues:
Tax liability quantification for services rendered by a security agency, invocation of extended period in notices, imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.

Analysis:

1. Tax Liability Dispute:
The case involves a dispute over the quantification of tax liability for services provided by the appellant as a security agency. The appellant, registered with a cooperative society, offered security guards to various organizations and paid service tax from 1.4.2004 onwards. The issue arose when the Revenue demanded differential service tax for the period 1.4.2002 to 31.3.2007, covering service charges but excluding guards' salaries and other amounts received for services.

2. Invocation of Extended Period and Penalties:
The appellant contested the invocation of the extended period in the notices dated 12.10.2007, 20.6.2008, and 15.5.2013, along with penalties imposed. The appellant argued a bona fide belief in discharging service tax based on their understanding, emphasizing disputes on tax liability for gross amounts including salaries. The appellant's counsel cited various cases to support the contention against the extended period and penalties.

3. Contentions and Rulings:
The appellant's counsel pleaded a lack of misstatement or suppression, challenging the justification for the extended period and penalties. The Revenue defended the impugned order, asserting that gross considerations received are subject to service tax under Section 67. The Tribunal referred to a similar case where the demand for an extended period was upheld but penalties were waived.

4. Tribunal's Decision:
After hearing both sides and reviewing the records, the Tribunal acknowledged the tax liability but questioned the sustainability of the demand for the extended period. Citing a Supreme Court decision, the Tribunal restricted a demand issued for the third time on the same subject to the normal period. The Tribunal upheld demands issued within the normal period but waived penalties under Section 80 considering the appellant's circumstances.

5. Conclusion:
Ultimately, the Tribunal held that the demand from the notice dated 15.5.2013 was time-barred, while demands from other notices were upheld. Penalties imposed on the appellant were waived invoking Section 80. The appeals were disposed of accordingly, emphasizing the importance of understanding tax liabilities and the implications of invoking the extended period for demands.