2019 (6) TMI 958 - AT - Service Tax

Extended period of Limitation - Business Auxiliary Service - Legal Service - services provided to Government agencies - malafide intentions or not - imposition of penalties - HELD THAT - The Government does not had intention to evade payment of duty therefore in the present case we hold that extended period of limitation is not invokable - extended period of limitation as well as penalty not imposable - demand upheld for normal period. Commercial Training or Coaching Service - demand of service tax - HELD THAT - Since the appellant does not have its own training institute and training is provided by franchisee training institutes the service tax is not payable by the appellant in respect of computer and non-computer training because service recipients are trainees and the service providers are franchisee training institutes. Therefore the demand in respect of Commercial Training or Coaching Service even for the normal period of limitation is not sustainable - demand not sustainable. Consulting Engineering services - HELD THAT - Consultancy Engineering Services were provided in respect of survey work allotted to Government Agencies. We further note that learned Counsel for the appellant had argued that the Consultancy Services were provided to Government Agencies - since the consultancy services were provided to Government Agencies by the Government Company therefore service tax is not payable on the said activity. Appeal allowed in part.

Summary

Issues:
- Service tax demand on a government company for consultancy services
- Applicability of extended period of limitation for service tax demand
- Liability of service tax on commercial training and coaching services
- Liability of service tax on consultancy engineering services provided to government agencies

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved two appeals arising from a common impugned Order-in-Original passed by the Commissioner of Central Excise & Service Tax, Kanpur. The first issue addressed was the service tax demand on a government company for consultancy services provided. The appellant, established by the Government of Uttar Pradesh, argued that the intention to evade service tax payment cannot be presumed against a government company. The Tribunal considered case laws and held that since the government did not have the intention to evade duty, the extended period of limitation was not applicable. Therefore, the demand for the extended period and the penalty imposed were set aside.

Regarding the liability of service tax on commercial training and coaching services, the Tribunal noted that the appellant did not have its own training institute and provided training through franchisee institutes. As the service recipients were trainees and the service providers were franchisee training institutes, the Tribunal concluded that the service tax was not payable by the appellant for these services. Thus, the demand for commercial training and coaching services was deemed unsustainable.

The judgment also addressed the liability of service tax on consultancy engineering services provided to government agencies. The appellant argued that since the consultancy services were provided to government agencies by a government company, service tax was not applicable. The Tribunal upheld this argument and set aside the remaining impugned order, while confirming the service tax liability for specific services.

In conclusion, the Tribunal allowed both appeals, setting aside the demand for the extended period and penalties, and confirming the service tax liability for specific services provided by the appellant. The judgment provided a detailed analysis of each issue raised, considering the nature of services provided and the status of the appellant as a government company.