2019 (6) TMI 632 - AT - Service Tax

Short payment of service tax - Broadcasting Service - Advertising Space or Time Service - Consulting Engineer Service - cum-tax benefit - extended period of limitation - HELD THAT - It would be appropriate at this stage to examine the chart that is contained in the second show cause notice dated 18 May 2009. The said chart is for the Financial Years 2003 04 to 2007-08. It gives the total income receipt for each of the Financial Years and the taxable value as per ST-3 returns for each of the Financial Years. It then gives the difference in the taxable values for each of the Financial Years and the short paid service tax in each Financial Year. It is no doubt true that the first show cause notice dated 17 October 2008 that was issued to the appellant is for a part of the Financial Year 2007-08, namely from April 2007 to September 2007 which period is included in the second show cause notice dated 18 May 2009, but what needs to be pointed out is that the first show cause notice is based on the total income shown by the appellant in the ST-3 return for the said period. The show cause notice alleges that even on the taxable value shown in the ST-3 return, the appellant short paid service tax. It does not challenge the correctness of the taxable value shown in the ST-3 return. Validity of second SCN - HELD THAT - The second show cause notice, on the other hand, challenges the taxable value indicated by the appellant in the ST-3 return for the Financial Year 2003-04 to Financial year 2007-08. It is stated that lesser taxable value has been shown .There is, therefore, no overlapping of issues in the two show cause notices. Penalties - HELD THAT - The penalties are set aside by invoking section 80. Appeal allowed in part.

Summary

Issues Involved:
1. Demand of service tax amounting to ?3,55,03,646/- for the period April 2007 to September 2007.
2. Demand of service tax amounting to ?87,10,47,545/- for the period from Financial Year 2003-04 to 2007-08.
3. Imposition of penalties under sections 76 and 77 of the Finance Act, 1994.

Issue-Wise Detailed Analysis:

1. Demand of Service Tax for April 2007 to September 2007:
The appellant was issued a show cause notice on 17 October 2008 for short payment of service tax amounting to ?3,55,03,646/- for the period April 2007 to September 2007. The notice indicated discrepancies between the service tax liability calculated on the taxable value declared in the ST-3 returns and the actual tax paid. The appellant was asked to justify why the short paid amount should not be recovered under Section 73 of the Finance Act, 1994, along with applicable interest under Section 75 and penalties under Sections 76 and 77.

2. Demand of Service Tax for Financial Year 2003-04 to 2007-08:
A second show cause notice dated 18 May 2009 was issued for the period from Financial Year 2003-04 to 2007-08, alleging that the appellant declared a lower taxable value in their ST-3 returns compared to their gross receipts. This resulted in a short payment of service tax amounting to ?87,10,47,545/-. The notice included a detailed reconciliation of income receipts and taxable values, highlighting discrepancies for each financial year.

3. Imposition of Penalties:
The appellant contended that penalties under Sections 76 and 77 should not be imposed, citing that they are a statutory body and malafides cannot be attributed to them. They also requested the benefit of Section 80 for non-imposition of penalties. The Tribunal, in a previous order dated 5 March 2018, had set aside penalties under Sections 77 and 78, invoking Section 80 of the Act.

Judgment Analysis:

Demand of Service Tax for April 2007 to September 2007:
The Tribunal noted that the first show cause notice was based on the taxable value declared in the ST-3 returns for April 2007 to September 2007, and the issue was the short payment of service tax on this declared value. The appellant's contention that this period was included in the second show cause notice was dismissed as irrelevant because the issues in the two notices were different.

Demand of Service Tax for Financial Year 2003-04 to 2007-08:
The Tribunal clarified that the second show cause notice addressed discrepancies between the taxable values declared in the ST-3 returns and the gross receipts as per the balance sheets, covering a broader period from Financial Year 2003-04 to 2007-08. The issues in the two notices were distinct, with the first focusing on short payment based on declared values and the second on under-declaration of taxable values.

Imposition of Penalties:
The Tribunal upheld the appellant's contention regarding penalties, setting aside the penalty imposed under Section 77 of the Act, as the provisions of Section 80 were applicable. The remaining portion of the impugned order, including the demand for service tax and interest, was upheld.

Conclusion:
The appeal was allowed to the extent of setting aside the penalty under Section 77, while the rest of the impugned order, including the service tax demand and interest, was upheld. The Tribunal emphasized that the issues in the two show cause notices were distinct and did not overlap.