2018 (5) TMI 987 - HC - Service Tax

Extended period of Limitation - suppression of facts - Business Auxiliary Service - Whether the CESTAT was justified in restricting the demand of Service Tax to normal period despite holding the activity of the assessee to be classifiable under Business Auxiliary Service and liable to Service Tax, when the assessee has concealed and suppressed the said information? - Held that - the definition of Business Auxiliary Service was expanded and made much more wide with effect from 10.9.04. The appellant was already paying service tax under various categories and separate litigation was there whether the activity undertaken by the appellant is covered within the definition of tour operators . It is further on record that the appellant has been subjected to periodical audit repeatedly both by the the department as well as statutory audit by CAG. It is further on record that the appellant is a State Government undertaking which can have no intention to deliberately evade payment of service tax - the demand made in the show cause notice has to be restricted to that falling within the normal time limit under section 73. Demand of service tax is sustained within the normal period of limitation and set aside for the period beyond it - case is remanded to the original adjudicating authority for requantification of the demand falling within the normal time limit. Appeal dismissed - decided in favor of Revenue.

Summary

Issues:
1. Interpretation of liability under "Business Auxiliary Service" for a Govt. company providing tourism services.
2. Assessment of time limitation for demand of Service Tax.
3. Justification for restricting demand within the normal period.

Interpretation of Liability under "Business Auxiliary Service":
The case involved a Govt. company engaged in tourism activities charging a facilitation fee for stopping trains near shops for passengers' convenience. The Revenue argued that the facilitation fee constituted commission for promoting or selling goods, falling under 'Business Auxiliary Service' liable for Service Tax. The tribunal upheld this view, classifying the activity under 'Business Auxiliary Service' and directing the case for requantification within the normal time limit.

Assessment of Time Limitation for Demand of Service Tax:
The appellant contended that the tribunal erred in not extending the time limitation under Section 73 for demand of Service Tax. However, the tribunal justified its decision by noting the appellant's compliance with various tax categories, regular audits, and being a State Government undertaking unlikely to evade tax intentionally. The tribunal restricted the demand to the normal period, setting aside the demand beyond that period.

Justification for Restricting Demand within the Normal Period:
The tribunal's decision to restrict the demand within the normal time limit was based on the appellant's history of tax compliance, periodic audits, and being a State Government entity. The tribunal found no intention of deliberate tax evasion by the appellant, leading to the demand being sustained within the normal period and set aside for the period beyond it. The High Court concurred with the tribunal's view, dismissing the appeal as no substantial question of law arose from the case.

In conclusion, the judgment addressed the interpretation of liability under "Business Auxiliary Service" for a Govt. company, assessed the time limitation for demand of Service Tax, and justified the restriction of the demand within the normal period based on the appellant's tax compliance history and lack of intent to evade tax.