2018 (9) TMI 1598 - HC - Service Tax

Classification of Services - Whether the service provided by M/s. Rochem AG Swizerland to the Respondent herein is covered under the Intellectual Property Right Service' falling under Clause (zzr) of Section 65(105)? - Held that - This question become academic as it is undisputed that the show cause notice has been issued on 1st February, 2010 seeking to recover service tax for the period 2007-08 - Supreme Court in the case of Commissioner of Customs, Mumbai Vs. B.V. Jewels 2004 (9) TMI 104 - SUPREME COURT OF INDIA , has held that where the Tribunal finds that the demand by the Revenue is barred by limitation. There is no need to go into the merits of the controversy - the question does not give rise to any substantial questions of law being academic. Thus not entertained. Time Limitation - Whether the provisions of extended time period laid down in Section 73(i) are invokable in the present case? - Held that - This question also not giving rise to any substantial question of law and is dismissed. Appeal dismissed.

Summary

Issues:
1. Whether the service provided falls under "Intellectual Property Right Service"?
2. Whether the provisions of extended time period under Section 73(1) can be invoked?

Analysis:

Issue 1:
The Tribunal found that the demand for service tax was time-barred, rendering the question of whether the service provided falls under "Intellectual Property Right Service" as academic. The Tribunal decided the matter solely based on limitation, citing a Supreme Court ruling that when a demand is barred by limitation, there is no need to delve into the merits of the case. As the show cause notice was issued seeking to recover service tax for a specific period, the Tribunal did not find it necessary to address the substantive question of law regarding the nature of the service provided.

Issue 2:
Regarding the invocation of the extended time period under Section 73(1), the Respondent had paid Royalty for technical know-how charges to a foreign party. The show cause notice demanded a specific amount for a particular period, invoking the extended period of limitation. The Commissioner upheld the demand, applying the reverse charge mechanism and the extended time period of limitation. However, no penalties were imposed. The Tribunal considered two issues: whether the service received fell under Intellectual Property Rights Service and whether the extended period could be invoked. The Tribunal based its decision solely on the issue of limitation, as the demand was found to be time-barred due to the unclear legal position at the relevant time. The Tribunal noted that the Commissioner had waived penalties due to confusion regarding taxability under the reverse charge mechanism. The Tribunal held that since no penalty was imposed, similar to the conditions for invoking the extended period, the demand for the extended period should be set aside. The Tribunal's decision was based on the fact that the position in law was not clear at the time, and the Revenue had accepted the Commissioner's decision not to impose penalties. The Tribunal's decision was considered a possible view and did not warrant interference.

In conclusion, the Appeal was dismissed, and no costs were awarded.