2019 (5) TMI 594 - AT - Service Tax

Extended period of limitation - Maintenance or Repair Service - suppression mis-statement etc or not - HELD THAT - It is not the case of the Revenue that the respondent had recovered any amount representing Service Tax in respect of the taxable service provided by it and retained such amount without depositing into the Government Exchequer. Non-payment of Service Tax during the disputed period i.e 09.07.2004 to 31.03.2006 was owing to the reason that there were confusions with regard to levy of Service Tax on the disputed service which is apparent from various notifications and circulars issued by the Government from time to time. Thus under such circumstances extended period of limitation cannot be invoked without proper substantiation that the respondent had really indulged into the activities concerning fraud collusion etc with the intent to defraud the Government Revenue. The issue regarding levy of service tax on the taxable category of service of maintenance or repair was not free from doubt in as much as different views are expressed by the Board from time to time - the department is not justified in invoking the extended period of limitation. Appeal dismissed - decided against Revenue.

Summary

Issues:
Revenue's appeal against dropping show cause proceedings due to extended period limitation not being invoked for confirmation of demand.

Analysis:
The Revenue appealed against the dropping of show cause proceedings by the Commissioner of Service Tax, Ahmedabad, on the grounds that the services provided by the respondent were taxable under "Maintenance or Repair Service" from 01.07.2003. The Revenue argued that since the appellant did not pay the service tax from the effective date, they are liable to pay the tax, and the extended period of limitation should have been invoked for initiating the proceedings.

The Ld. Advocate for the respondent contended that the payment of service tax under the disputed service was contentious at the relevant time. The respondent paid the disputed service tax following a clarification issued by the CBEC, and thus, charges of suppression or misstatement could not be leveled against them. The Ld. Advocate relied on previous decisions to support the argument that the proceedings were time-barred.

After hearing both sides and examining the records, the Adjudicating Authority found that the respondent contested the levy and had genuine doubts, as evidenced by their correspondence with the department. The Authority noted that the issue was not beyond doubt and that there was no malafide intent on the part of the respondent. The Revenue did not claim that the respondent had collected service tax and retained it without depositing it. The non-payment during the disputed period was due to confusion regarding the levy of service tax, as indicated by various notifications and circulars. The Tribunal agreed that the extended period of limitation could not be invoked without evidence of fraudulent activities. They found support in previous decisions indicating the ambiguity surrounding the levy of service tax on maintenance or repair services. Consequently, the Tribunal dismissed the Revenue's appeal, stating that there was no merit in it.