2018 (11) TMI 529 - HC - Service Tax

Time Limitation - Consignment agency commission - Service Tax demand is for the period from 16.07.1997 to 31.03.1998 against the respondent. SCN is issued on 13.06.2001 - Held that - Section 73 of the Act stipulates that where any service tax has not been levied or paid or has been short-levied or short-paid, the demand could be made within eighteen months from the relevant date - In the case on hand, the service tax is demanded for the period ending 31.03.1998 whereas show-cause notice is issued on 13.06.2001, much beyond the statutory period. The contention that the proviso to Section 73 empowers extension of period upto five years and demand notice issued on 13.06.2001 is well within the proviso to Section 73 of the Act cannot be accepted on the facts of the present case - On perusal of SCN, it is seen that there is no allegation with regard to fraud, collusion, willful misstatement, suppression of fact nor contravention of any provisions or rules to evade payment of service tax - The ingredients of Section 73 of the Act are conspicuously absent in the SCN. Appeal dismissed.

Summary

Issues:
1. Time-barred demand of service tax.
2. Invocation of extended period under Section 73 of the Finance Act, 1994.

Analysis:
1. Time-barred demand of service tax:
The case involved a dispute regarding a service tax demand on consignment agency commission paid by the respondent to another company. The revenue appealed against the Tribunal's decision that the demand was time-barred. The show-cause notice was issued on 13.06.2001 for the period July 1997 to March 1998. The Appellate Authority initially confirmed the demand, but the Tribunal dismissed the appeal on the grounds that the demand was time-barred. The revenue contended that the respondent had suppressed facts, justifying the extension of the period under Section 73 of the Act. However, the Court held that the demand notice issued beyond the statutory period did not fall within the proviso to Section 73, which allows an extension of up to five years in cases of fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions with the intent to evade payment of service tax.

2. Invocation of extended period under Section 73 of the Finance Act, 1994:
Section 73 of the Act allows for the recovery of service tax not levied or paid within eighteen months from the relevant date. The provision permits an extension of up to five years in cases involving fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions with the intent to evade payment of service tax. The Court noted that the show-cause notice did not allege any of these circumstances that would warrant the extension of the period for demanding service tax. As such, the Tribunal's decision to reject the revenue's appeal was upheld, as the essential elements under Section 73 were not present in the case at hand.

In conclusion, the Court dismissed the appeal, affirming the Tribunal's decision that the demand for service tax was time-barred and that the invocation of the extended period under Section 73 of the Finance Act, 1994 was not justified in this case.