2018 (5) TMI 1215 - AT - Service Tax

Extended period of limitation - it was contended that for the period from January, 2005 to March, 2008 appellant did not pay Service Tax on outward freight where gross amount charged was between ₹ 750/- and ₹ 1500/- by availing benefit under Notification No.34/2004-ST dated 03/12/2004 to which they were not eligible - invocation of Sub-section 1 of Section 73 of Finance Act - Held that - ST-3 returns requires declaration of only the taxable value and also the value on which tax is not being paid and obviously the value on which tax was not paid, was declared by them in their ST-3 returns and therefore, suppression is not established - extended period not invocable - appeal allowed - decided in favor of appellant.

Issues:
1. Service Tax liability on outward freight under Notification No.34/2004-ST.
2. Imposition of penalty under Section 76 and 78 of Finance Act, 1994.
3. Invocation of extended period of limitation for demand.
4. Suppression of facts by the appellant.

Service Tax Liability on Outward Freight:
The case involved a dispute regarding the payment of Service Tax on outward freight by the appellants for the period from January 2005 to March 2008. The appellants claimed exemption under Notification No.34/2004-ST for freight charges between ?750 to ?1500, which the authorities contended they were not eligible for. The Original Authority held that the exemption applied only to single consignments with freight charges not exceeding ?750, and since the appellants' consignments exceeded ?750 but were below ?1500, Service Tax was payable. The Commissioner (Appeals) upheld the demand but set aside the penalty under Section 78, considering the appellants' compliance with the law for freight charges above ?1500. The appellants challenged the confirmation of demand in the appeal.

Imposition of Penalty:
The Original Authority imposed penalties under Sections 76 and 78 of the Finance Act, 1994. While the Commissioner (Appeals) upheld the demand, the penalty under Section 78 was set aside. The Commissioner noted that the penalty provisions cover instances of suppression of facts, but since the appellants were paying Service Tax on freight above ?1500, there was no deliberate breach of the law by them. This decision was a point of contention in the appeal filed by the appellants.

Invocation of Extended Period of Limitation:
The appellants argued that the demand raised by invoking the proviso to Sub-section 1 of Section 73 of the Finance Act, 1994, for the period from January 2005 to March 2008, was barred by limitation as the show cause notice was issued beyond the normal one-year period. They contended that the grounds for invoking the extended period were not specified in the notice. The Tribunal considered these arguments and found that the suppression of facts was not established, as the appellants had declared the value on which tax was not paid in their ST-3 returns. Consequently, the extended period of limitation was deemed inapplicable in this case.

Suppression of Facts:
The issue of suppression of facts by the appellants was crucial in determining the applicability of the extended period of limitation. The Revenue contended that the appellants had suppressed facts by not disclosing full details of freight paid to evade Service Tax. However, the Tribunal observed that the ST-3 returns required declaration of only the taxable value, and since the value on which tax was not paid was disclosed, suppression was not proven. This finding led to the setting aside of the Order-in-Appeal and the allowance of the appeal filed by the appellants.

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