2018 (11) TMI 746 - AT - Service Tax

Consulting Engineering Service - appellant is a unit of SAIL, engaged in in-house design and engineering activities for all the units of SAIL - service to self or not - Held that - Tribunal in the case of M/s. Executive Engineering Vs. CCE & ST, Jaipur, 2018 (9) TMI 662 - CESTAT NEW DELHI has held that service provided to oneself is not taxable - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant is liable to pay service tax on services provided to another unit of the same company.
2. Whether the extended period of limitation can be invoked in the present case.

Analysis:

Issue 1: Liability for Service Tax
The appellant, a unit of SAIL, was alleged to provide taxable services under the category of "Consulting Engineering" to various units of SAIL. The Adjudicating Authority confirmed the demand for Service Tax along with interest and penalties. The appellant argued that being a unit of SAIL, the services provided to other units should not be taxable as it amounts to service to self and cannot be subjected to Service Tax. The appellant emphasized that the book adjustments through debit notes between units were merely transfer of expenses and not consideration received. The Tribunal referred to various decisions and held that service provided to oneself is not taxable. It was observed that both the appellant and the recipient unit were part of the same company, and hence, the transaction did not constitute provision of service for taxability. The Tribunal concluded that no service tax was payable in the given scenario, setting aside the impugned order and allowing the appeal.

Issue 2: Extended Period of Limitation
The appellant argued that the extended period of limitation was not applicable as all relevant facts were known to the Department since 2004. The Tribunal agreed with the appellant, holding that the Show Cause Notice issued in 2008 was time-barred. Citing relevant case laws, the Tribunal emphasized that when no taxability is involved, the question of evasion of tax does not arise, and the Department cannot invoke the extended period of limitation. Consequently, the imposition of penalties based on a time-barred notice was deemed incorrect, and the appeal was allowed with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand for Service Tax and penalties, based on the grounds that the services provided were not taxable due to the entities involved being part of the same company, and the extended period of limitation was inapplicable in the given circumstances.