2019 (11) TMI 434 - AT - Service Tax

Classification of services - renting of immovable property or not - appellant offered slaughter house belonging to them for operation and management to M/s Frigorifico Allana Ltd. by entering into an agreement by charging license fee to M/s Frigorifico Allana Ltd. through a contract - Extended period of limitation - validity of SCN - HELD THAT - The said show cause notice came to be adjudicated by the Commissioner by way of passing two separate orders, one dated 10 January, 2014 and the other dated 19 September, 2014, which two orders are impugned before us by way of filing two separate appeals. As the same show cause notice has been adjudicated by way of order dated 10 January, 2014, the subsequent order passed on 19 September, 2014 has to be held as infructuous. As such the appeal filed against the same being Service Tax Appeal No.70363 of 2018 is dismissed on the said ground itself as infructuous. Classification of goods - The said transaction appeared to be Renting of Immovable Property to Revenue, therefore, service tax demand of around ₹ 1.31 crores was raised through show cause notice dated 18 October, 2013 by invoking extended period of limitation - HELD THAT - The appellant is a Municipal Corporation which a local self-government and there are large number of decisions of Tribunal which have held that allegation of intention to evade payment of tax cannot be leveled against a Government Organization. Since the appellant is a local self-government, the allegation of intention to evade payment of tax is not sustainable against the appellant. Therefore extended period of limitation was not available to the Revenue in the present case - since the entire demand is beyond the normal period of limitation the same is not sustainable. Appeal allowed - decided in favor of appellant.

Issues:
1. Request for adjournment by the appellant's Chartered Accountant on health grounds.
2. Whether the transactions involving the appellant and M/s Frigorifico Allana Ltd. constitute 'Renting of Immovable Property Service' and are liable for service tax.
3. Validity of the show cause notice issued to the appellant by the Revenue.
4. Applicability of the extended period of limitation in the case of a Municipal Corporation.
5. Whether the intention to evade payment of tax can be attributed to a Government Organization.

Issue 1: Request for Adjournment
The Chartered Accountant representing the appellant sought an adjournment on health grounds. The Tribunal decided to proceed with the case without the presence of the Chartered Accountant, as they deemed the appeals could be disposed of even in the absence of the said representative.

Issue 2: 'Renting of Immovable Property Service'
The appellant, a Municipal Corporation, entered into an agreement with M/s Frigorifico Allana Ltd. for the operation and management of a slaughterhouse. The Revenue contended that this transaction fell under the category of 'Renting of Immovable Property Service,' leading to the issuance of a show cause notice covering a specific period.

Issue 3: Validity of Show Cause Notice
The Commissioner adjudicated the show cause notice through two separate orders, with one dated 10 January, 2014, and the other dated 19 September, 2014. The Tribunal held that the subsequent order of 19 September, 2014, was infructuous as the same notice had already been adjudicated, resulting in the dismissal of the appeal related to that order.

Issue 4: Extended Period of Limitation
Regarding the demand for service tax, the Tribunal considered the applicability of the extended period of limitation in the case of a Municipal Corporation. It was noted that previous Tribunal decisions established that the allegation of intention to evade tax cannot be attributed to a Government Organization like a local self-government. Consequently, the extended period of limitation was deemed unsustainable against the appellant.

Issue 5: Intention to Evade Payment of Tax
Given the nature of the appellant as a local self-government, the Tribunal concluded that the allegation of intention to evade tax was not sustainable. As a result, the demand for service tax beyond the normal period of limitation was deemed unsustainable, leading to the setting aside of the impugned order and the allowance of the appeal.

In conclusion, both appeals were allowed by setting aside the impugned orders, with the Tribunal ruling in favor of the appellant based on the issues analyzed and discussed during the proceedings.

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