2019 (2) TMI 1493 - AT - Service Tax

Levy of service tax - amount received in advance - amended provisions of Section 67 read with Rule 6 of the Service Tax Rules 1994 - Erection Commissioning or Installation Service - disputed period from April 2007 to March 2008 - time limitation - Held that - The appellant received certain advances from their customers for services to be provided. However they did not discharge the service tax on the amount of advance as and when received before the due date. However it is not disputed that they were discharging the service tax as and when the service was billed - After the conclusion of the reconciliation exercise the adjudicating authority has ordered payment of service tax in an amount of 1, 36, 58, 701/-. This amount is in fact more than the amount of service tax demanded in the show cause notice viz 83, 48, 183/-. Time Limitation - Held that - The original ST-3 return was filed on 25 April 2008 and the revised return filed on 23 July 2008. These returns are filed for the period October 2007 to March 2008. In the revised return the amount of advance received is included. It is noted that the amount of advance to the extent of 6, 64, 41, 935/- has been reflected in the revised return - Revenue is not justified in alleging suppression for invoking the extended period of limitation after appellant has filed the revised return including the advances - SCN hit by limitation. Appeal allowed - decided in favor of appellant.

Issues:
1. Demand for service tax on advance payments received.
2. Reconciliation exercise carried out by the adjudicating authority.
3. Applicability of service tax on different categories of advance payments.
4. Challenge to the order by the appellant.
5. Time bar for the show cause notice.
6. Arguments presented by both parties.
7. Decision on the appeal based on limitation.

Issue 1: Demand for service tax on advance payments received
The appeal was against an Order-in-Original passed by the Commissioner, Central Excise-II, Jaipur, regarding the demand for service tax on advance payments received by the appellant. The audit revealed that the appellant received advances from customers, adjusting them in running bills. The audit team held that service tax was payable on these advances under the amended provisions of Section 67 read with Rule 6 of the Service Tax Rules, 1994.

Issue 2: Reconciliation exercise carried out by the adjudicating authority
The adjudicating authority, in compliance with the Tribunal's directions, conducted a reconciliation exercise to determine the service tax liability on the advances received. The reconciliation results showed different categories of advances and the corresponding service tax involved, totaling to ?1,36,58,701.

Issue 3: Applicability of service tax on different categories of advance payments
The appellant contested the service tax liability on certain advance payments, arguing that some activities were not liable for service tax under specific categories. The appellant's representative highlighted various advance amounts received for different activities and contended that not all advances were subject to service tax.

Issue 4: Challenge to the order by the appellant
The appellant challenged the order on various grounds, including exceeding the amount specified in the show cause notice, disputing the service tax liability on specific advance payments, and raising issues of time bar for the show cause notice.

Issue 5: Time bar for the show cause notice
The appellant argued that the show cause notice was time-barred, as it was issued beyond the limitation period. The appellant submitted that the revised ST-3 return filed on 23 July 2008 included the advance amounts received, thus challenging the allegation of suppression by the Revenue.

Issue 6: Arguments presented by both parties
The appellant's counsel argued that the entire demand should be set aside due to exceeding the specified amount in the show cause notice, disputing the service tax liability on certain advances, and asserting time bar for the notice. The Revenue representative justified the order, emphasizing the alleged suppression by the appellant.

Issue 7: Decision on the appeal based on limitation
After careful consideration, the Tribunal found that the show cause notice was indeed time-barred. Citing a previous decision involving the same revised return filing, the Tribunal held that the Revenue's allegation of suppression was unjustified. Consequently, the impugned order was set aside, and the appeal was allowed based on the limitation issue.

This detailed analysis of the legal judgment covers the key issues involved, the arguments presented by both parties, and the Tribunal's decision based on the plea of limitation.

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