2018 (2) TMI 1031 - AT - Service Tax

Consulting engineer service - Extended period of limitation - whether the Department was entitled to issue show-cause notice dt. 21/04/2005 for demand of service tax, by invoking the longer time limit under Section 73 of the Finance Act, 1994? - Held that - the Department had in fact issued 5 show-cause notices which covered some of period covered in the present proceedings. From the earlier SCN and the corresponding order of the original authority, it is found that the Department, in fact, in addition to alleging non-filinng of ST3 returns had also assessed the liability of the respondent for a part of the period which is covered in the present proceeding - the Department was precluded from issuing another SCN invoking the suppression clause. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Challenge to Order-in-Appeal No. 125-07 dated 15/03/2007 regarding service tax demand
- Interpretation of show-cause notices issued for non-filing of returns
- Invocation of suppression clause for extended time limit under Section 73 of the Finance Act, 1994
- Justification of impugned order restricting service tax demand

Analysis:

The appeal before the Appellate Tribunal CESTAT, Bangalore involved a challenge by the Revenue against Order-in-Appeal No. 125-07 dated 15/03/2007 regarding service tax demand against a respondent providing consulting engineer services. The original authority confirmed a demand of service tax, interest, and penalties for the period October 1999 to September 2004. The respondent contested this before the Commissioner(Appeals), who restricted the demand to within a normal one-year period, based on the non-filing of returns. The Revenue raised several grounds challenging the impugned order.

One of the key issues raised was the interpretation of show-cause notices issued for non-filing of returns. The Revenue argued that the Department was not aware of the extent of services provided by the respondent due to the non-filing of mandatory ST3 returns. However, the respondent contended that the show-cause notice issued was within the time limit after full details were submitted to the Department, and the non-filing of returns was not suppression warranting an extended period for demand.

Another crucial issue was the invocation of the suppression clause for an extended time limit under Section 73 of the Finance Act, 1994. The Revenue claimed that the Department became aware of the full service tax liability only after details were submitted during a statement recording in 2005. The respondent argued that the Department had already issued multiple show-cause notices covering the same period, and invoking the suppression clause again was not justified.

The Tribunal analyzed the impugned order and the arguments presented by both sides. It noted that the Department had issued multiple show-cause notices covering periods overlapping with the present proceedings. Based on this, the Tribunal agreed with the Commissioner(Appeals) that the Department was precluded from issuing another show-cause notice invoking the suppression clause. Consequently, the Tribunal upheld the impugned order, rejecting the appeal filed by the Revenue.

In conclusion, the Tribunal's decision centered on the interpretation of show-cause notices, the invocation of the suppression clause for an extended time limit, and the justification for restricting the service tax demand based on the facts and legal precedents presented during the proceedings.