2020 (4) TMI 145 - HC - Service Tax

Business Auxiliary Service - appellant/assessee introduces potential consumers to the bank, and charges commission as and when the advance is made - extended period of limitation - HELD THAT - This Court notices that this question was given up by the assessee during the hearing of the appeal; no question of law arises on this aspect. Extended period of limitation - HELD THAT - The law is well settled that in the absence of any proven or established allegations of existence of active intent to defeat the law or to cheat the revenue expression used in Section 11A of the Central Excise Act fraud or willful misrepresentation or suppression of facts , the revenue cannot claim the benefit of an extended period of limitation - the mere omission to pay tax and the revenue inability to prove of any mental intent to evade taxes per se cannot result an invocation of the extended period of limitation. The invocation of the extended period is held to be bad in law. However, the revenue is entitled to collect service tax dues in accordance with law for the normal period of six months prior to the issuance of the show cause notice - Appeal allowed in part.

Summary

Issues:
1. Whether the activity performed by the appellant matches the description of 'business auxiliary service'?
2. Whether the invocation of the extended period of limitation is justified?

Analysis:

1. The appellant argued that introducing potential consumers to the bank and charging commission does not constitute 'business auxiliary service' since banking is not subject to service tax levy. However, during the appeal hearing, the appellant abandoned this argument. The court noted this and concluded that no question of law arises on this aspect.

2. The second issue raised was regarding the invocation of the extended period of limitation for the disputed period between 01/04/2005 and 05/09/2008. The court referred to established legal principles that the revenue cannot claim the benefit of an extended period of limitation without proven allegations of active intent to evade taxes. Citing relevant case laws, including Collector of Central Excise vs. Chempher Drugs & Liniments, the court emphasized that mere omission to pay tax without proof of intent to evade taxes does not warrant the invocation of the extended period of limitation.

3. Consequently, the court held that the invocation of the extended period was unjustified in this case. However, the revenue was deemed entitled to collect service tax dues for the normal period of six months before the issuance of the show cause notice. Therefore, the appeal was partly allowed, granting relief to the appellant on the issue of the extended period of limitation.