2019 (7) TMI 1422 - AT - Service Tax

Validity of subsequent SCN - Invocation of Extended period of Limitation - Non-payment of service tax - Renting of Immovable Property Services - period October 2008 to March, 2009 and September, 2009 to October, 2009 - HELD THAT - It is not disputed by the ld. Authorised Representative that earlier also a show cause notice dated 08/10/2010 was issued to the Appellants for the same issue concerning the same licensee, covering the period April, 2009 to August 2009. If that is so and if the department is aware about the alleged misdeeds in the year, 2010 itself, when the first show cause notice was issued, then why the department waited for three long years for issuing the second show cause notice for the same issue that too by invoking the extended period. It is legally unsustainable. Undisputedly, the second show cause notice dated 22/4/2013 was issued covering the period October, 2008 to March, 2009 and September, 2009 to October, 2009 by invoking the extended period. The first/earlier show cause notice dated 08/10/2010 was issued to the Apellants covering the missing interregnum period of the second show cause notice i.e. April, 2009 to August, 2009, therefore the fact about non-payment of Service tax by the Appellants was within the knowledge of the department. In view of these facts the extended period could not have been invoked in the second show cause notice. It is settled legal position that in a case where a show cause notice has been issued for the earlier period on certain set of facts, then on the same or similar set of facts another show cause notice, invoking the extended period of limitation, cannot be issued as the facts were already within the knowledge of the department - the appeal filed by the Appellants deserves to be allowed on the point of limitation itself - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Barred by limitation - extended period of limitation invoked.
2. Non-payment of service tax on renting of immovable property.
3. Appellant's strong case against demand for service tax.
4. Appellant's belief regarding non-liability for service tax.
5. Suppression of facts and invoking extended period of limitation.
6. Legal position on issuance of multiple show cause notices.

Analysis:
1. The appeal challenged the order by the Commissioner of CGST & Central Tax(Appeals-I) regarding the demand for service tax on renting of immovable property services. The Appellants were accused of not discharging service tax on rent collected from their tenants. The issue of limitation was crucial, with the Appellants arguing that the demand was barred by limitation due to the department's awareness of the non-payment of service tax as early as 2010. The Appellants cited legal precedents to support their claim that the extended period of limitation could not be invoked in this case.

2. The Appellants contended that renting per se was not a taxable service before 2010 and that confusion among members of a retailer association, including the lessee, led to non-payment of service tax. The Appellants maintained that they filed ST-3 Returns on time without suppression of facts, believing they were not liable for service tax during the disputed period. The Appellants also highlighted a previous order indicating their lack of intention to evade taxes, further supporting their argument against the demand for service tax.

3. The Appellants argued that the department's delay in issuing a second show cause notice, invoking the extended period of limitation, was legally unsustainable. The Tribunal noted legal principles established by the Hon'ble Supreme Court, emphasizing that if all relevant facts were known to the authorities when the first show cause notice was issued, subsequent notices based on the same facts could not be considered suppression of facts by the assessee. Consequently, the Tribunal allowed the appeal solely on the point of limitation, setting aside the demand for service tax and penalties.

4. The judgment underscored the settled legal position that when a show cause notice has been issued for an earlier period based on certain facts, subsequent notices invoking the extended period of limitation on the same or similar facts cannot be sustained. The Tribunal's decision was in line with previous rulings, emphasizing that the department's knowledge of relevant facts precluded the invocation of the extended period of limitation. As a result, the appeal was allowed on the grounds of limitation, providing consequential relief to the Appellants.