2019 (8) TMI 1027 - AT - Service Tax

Non-payment of service tax - fabrication, erection and commissioning work - wilful suppression of facts - Section 73(1) of Finance Act - Extended period of limitation - HELD THAT - In fact, under the terms of work order also it was the main contractor who had to discharge the service tax liability and the appellant had also not collected any service tax from the main contractors. This apart, it is not in dispute that the main contractors had actually deposited the service tax. The Commissioner failed to examine the reply filed by the appellant on this issue and has invoked the extended period of limitation in the impugned order only for the reason that facts came to the notice of the Department only when an audit was carried out and that the appellant had also not mentioned the amount in the ST-3 returns - the appellant could have been under a bona fide belief that neither service tax was required to be collected from the main contractor nor was it required to be deposited with the Government. Such being the position, the Commissioner fell in error in invoking the extended period of limitation. The matter, therefore, needs to be remitted to the Commissioner to calculate the service tax liability for the period prescribed under Section 73(1) of the Act without invoking the proviso that seeks to extend the period of limitation - Appeal allowed by way of remand.

Summary

Issues:
1. Confirmation of demand of service tax, interest, and penalty by the Commissioner.
2. Appellant's contention of not being liable to pay service tax due to main contractors' payment and certificates.
3. Invocation of extended period of limitation by the Commissioner.
4. Dispute regarding the interpretation of the law and suppression of facts by the appellant.
5. Consideration of conflicting decisions and remittance of the matter to the Commissioner.

Confirmation of Demand of Service Tax, Interest, and Penalty:
The appeal was filed to set aside the order confirming the demand of service tax, interest, and penalty imposed by the Commissioner. The appellant, a sub-contractor, received payments for work but did not pay service tax, believing the main contractors were liable and had paid it. The Show Cause Notice invoked the extended period of limitation, alleging non-disclosure and intent to evade tax. The appellant argued that main contractors paid the tax, and their certificates supported this. However, the Commissioner upheld the demand, stating the appellant was liable to pay service tax.

Appellant's Contention of Not Being Liable to Pay Service Tax:
The appellant contended that as the main contractors paid service tax and certificates confirmed this, the appellant was not required to pay. They argued that even if they paid, it would result in double taxation as main contractors would claim credit. The appellant also cited Tribunal decisions supporting their position. However, the Commissioner rejected these arguments, asserting the appellant's liability to pay service tax.

Invocation of Extended Period of Limitation:
The Commissioner invoked the extended period of limitation, alleging suppression of facts by the appellant to evade tax. The appellant claimed they believed in good faith that no tax was due based on Tribunal decisions. The Commissioner's decision was based on non-disclosure in ST-3 returns and audit findings. The appellant argued against the invocation of the extended period of limitation.

Dispute Regarding Interpretation of the Law and Suppression of Facts:
The appellant argued that conflicting Tribunal decisions created uncertainty, and they acted in good faith based on those decisions. They claimed no wilful suppression of facts existed, especially considering the main contractors' payment of tax. The Commissioner's decision was criticized for not considering the appellant's arguments and focusing on non-disclosure in returns.

Consideration of Conflicting Decisions and Remittance of the Matter:
The Tribunal found merit in the appellant's argument regarding the limitation period. It noted the lack of wilful suppression of facts and conflicting Tribunal decisions. The matter was remitted to the Commissioner to calculate the service tax liability within the standard limitation period without invoking the extended period. The Commissioner was directed to complete this calculation within three months from the date of the order.

This detailed analysis covers the issues raised in the judgment, including the confirmation of demand, appellant's liability, invocation of the extended period of limitation, interpretation of the law, and the remittance of the matter for further calculation within the standard limitation period.