2018 (10) TMI 1560 - AT - Service Tax

Extended period of limitation - Business Auxiliary Services - contract with M/s TRF Ltd., Jamshedpur for promoting sale of their products by informing the company of prospective markets and potential customers, to maintain close contract with all customers and consultants in the territory of northern reason and generate, acquire and forward the enquiries to M/s TRF Ltd. Held that - The lower authorities have invoked the longer period only on the ground that the appellant had not paid the service tax - However, the appellants were reflecting value of the services in their profit and loss account maintained in the ordinary course of business. Such reflection of the activities in the profit and loss account has been held to be a reason for not allowing the revenue to invoke the extended period. Inasmuch as, profit and loss account is a public document and reflection of the entire facts in the said documents cannot lead to the presence of malafide suppression on the part of the assessee. Inasmuch as, in the present case there is admittedly no evidence to show any suppression or misstatement on the part of the assessee with a malafide intention, longer period of limitation was not available to the revenue - Inasmuch as, the entire demand is beyond the normal period, same is set aside along with setting aside of penalty. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of service tax under 'Business Auxiliary Services' for the period 01.04.2009 to 30.06.2012; Imposition of penalties under various Sections of Finance Act, 1994; Appeal against the order reducing the demand to ?9,93,569/- by Commissioner (Appeals); Challenge on the point of limitation regarding nonpayment of service tax; Interpretation of malafide suppression for invoking longer period of limitation.

Analysis:
The judgment addresses the demand of service tax under 'Business Auxiliary Services' and penalties imposed for the period from 01.04.2009 to 30.06.2012. The appellant had a contract with a company for promoting sales, leading to the demand of ?11 lakhs, later reduced to ?9,93,569/- by the Commissioner (Appeals). The issue of limitation was raised by the appellant, arguing that nonpayment of tax alone does not constitute malafide suppression to warrant the longer period of limitation.

The Advocate for the appellant contended that there was no positive evidence of misstatement or suppression with a malafide intention, solely based on nonpayment of tax. The revenue argued that in self-assessment times, nonpayment obligated invoking the longer limitation period. The Tribunal analyzed the case, noting that the appellant had reflected the service value in their profit and loss account, a public document, which did not indicate malafide suppression.

Referring to the Supreme Court's decision in a similar case, the Tribunal emphasized that mere non-payment does not equate to collusion or willful misstatement. The Court's ruling was followed by various authorities, stating that 'suppression' in the law must involve deliberate acts to evade payment. As no evidence of suppression or misstatement with malafide intent was found, the Tribunal held that the longer limitation period was unjustified. Consequently, the demand beyond the normal period was set aside, along with the penalties, granting relief to the appellant.

In conclusion, the judgment clarifies the criteria for invoking the longer period of limitation based on malafide suppression in tax matters. It underscores the importance of deliberate acts or omissions with intent to evade payment, rather than mere non-payment, in determining the applicability of extended limitation periods. The decision provides a nuanced interpretation of legal provisions and precedents to ensure fairness in tax assessments.