2018 (10) TMI 643 - AT - Service Tax

Mandap keeper services - sale of food/beverages by the appellant-assessee also took place - Exemption under N/N. 12/2003-ST - Extended period of limitation - penalty - suppression of facts or not? - Held that - The booking of banquet hall on buffet menu basis consists of elements of renting and catering activity and it does not appear to be disputed that the amount of renting of the banquet hall and catering stands amotised in buffet menu, therefore, supply of food/beverages in the banquet hall are not sale of food/beverages where other services are involved and predominant, therefore, the predominant of these other activities in buffet menu fall under the category of Mandap Keeper Services - In the absence of any sale contract between the appellant-assessee and its customers the appellant-assessee is not eligible for exemption under N/N. 12/2003-ST and are liable to pay service tax under Mandap Keeper Services within the normal period of limitation. Penalty u/s 76 of FA - Held that - The act itself statutorily provides for waiver of penalty, since in the present case, there was a bona fide believe on the part of the appellant that their activities are not subject to service tax, based on the detail reasoning given above, therefore, there was a reasonable cause for failure if any on the part of the respondent assessee to pay service tax although they filed ST-3 returns - The issue involved in the present appeal involves interpretation of complex legal provisions, as such in terms of Section 80 penalty under Section 76 are hereby set aside. Extended period of limitation - Held that - The audit team recorded that nothing is found incriminating as such the allegation of suppression in the show cause notice does not survive - appeal of Revenue dismissed on this ground alone. Appeal allowed in part.

Summary

Issues:
1. Whether the appellant-assessee made true and full disclosure of taxable services provided in ST-3 returns.
2. Whether the appellant-assessee suppressed the correct value received from Mandap Keeper Service.
3. Whether the demand for service tax under Mandap Keeper Service is justified.
4. Whether the penalty imposed under Section 76 of the Finance Act is applicable.
5. Whether the demand imposed by extending the period of limitation is valid.

Issue 1:
The main issue revolved around whether the appellant-assessee, engaged in Mandap Keeper Services, disclosed all taxable services provided in their ST-3 returns. The appellant-assessee was found to have provided various taxable services but only disclosed Mandap Keeper service in their returns, thereby suppressing other services provided.

Issue 2:
Another key issue was whether the correct value received from Mandap Keeper Service was suppressed by the appellant-assessee. The scrutiny of documents revealed that the appellant-assessee had not fully disclosed the value received from providing Mandap Keeper Service, which led to the violation of Section 67 of the Finance Act, 1994.

Issue 3:
The demand for service tax under Mandap Keeper Service was contested by the appellant-assessee. The Commissioner confirmed the demand of service tax, citing the predominant nature of renting and catering activities in the banquet halls, falling under Mandap Keeper Services. The appellant-assessee argued that the sale of food and beverages was a simple sale, not subject to service tax.

Issue 4:
Regarding the penalty imposed under Section 76 of the Finance Act, the Tribunal found that the appellant-assessee had a reasonable cause for any failure to pay service tax, as they genuinely believed their activities were not taxable. Therefore, the penalty under Section 76 was set aside.

Issue 5:
The Revenue appealed against the dropping of demand due to the extended period of limitation. However, the Tribunal dismissed the appeal, noting that during the audit, no objection was raised regarding the eligibility for tax benefits, indicating no suppression on the part of the appellant-assessee.

In conclusion, the Tribunal allowed the appeal of the assessee in part and dismissed the appeal of the Department, emphasizing the importance of proper disclosure and compliance with tax regulations in service-related transactions.