2018 (10) TMI 1255 - AT - Service Tax

GTA Service - Reverse Charge Mechanism - payment of Service Tax made - invocation of sub-section (1) of Section 73 - extended period of limitation - Held that - The adjudged demand was confirmed on the appellant on the ground that it did not pay the service tax on GTA service, as per the provisions of Rule 2(1) (d) of the Service Tax Rules, 1994 - From the findings recorded in the adjudication order, it transpires that the department has not specifically alleged regarding non-payment or short payment of service tax. Thus the ingredients mentioned in the proviso to sub-section (1) of Section 73 of the Act are absent inasmuch as there is no question of fraud, collusion, suppression, will full misstatement etc., on the part of the appellant, in defrauding the Government revenue. The show cause proceedings initiated beyond the normal period, is clearly barred by limitation of time and as such, the adjudged demand confirmed against the appellant cannot be sustained on the ground of limitation alone - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant is liable to pay service tax on GTA service under reverse charge mechanism.
2. Whether the show cause proceedings against the appellant are barred by limitation of time.
3. Whether the adjudged demand confirmed against the appellant is sustainable.

Analysis:
Issue 1: The appellant was engaged in providing taxable services including GTA service under reverse charge mechanism. The department initiated proceedings seeking recovery of service tax on GTA service, which the appellant allegedly did not pay. The adjudication order confirmed a service tax demand along with penalties. On appeal, the Commissioner upheld the demand. The appellant argued that it had deposited service tax for all services, including GTA service, during the disputed period.

Issue 2: The appellant contended that the show cause notice was issued beyond the normal limitation period, as the department audited their accounts before issuing the notice. The appellant argued that since there was no short payment of tax on GTA service, the proceedings were time-barred. The department, however, supported the findings in the impugned order.

Issue 3: The Tribunal examined the adjudication order and found that while the appellant had paid a consolidated service tax amount for all services, the demand was confirmed based on non-payment of service tax on GTA service. The Tribunal noted that the department did not allege fraud, collusion, or suppression by the appellant. As a result, the Tribunal concluded that the show cause proceedings initiated beyond the normal period were barred by limitation. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the demand confirmed against them was not sustainable due to the proceedings being time-barred and the absence of evidence of fraud or willful misstatement.