2020 (10) TMI 473 - AT - Service Tax

Classification of services - Infrastructural Support Service or not - up linking services - hiring of transponder capacity by the appellant in the satellite of M/s. B.T. Singapore Pte. Ltd. - Reverse charge mechanism - extended period of limitation - HELD THAT - In the case of M/S. SRINIVASA TRANSPORTS VERSUS CCE. ST., VISAKHAPATNAM-I 2014 (6) TMI 205 - CESTAT BANGALORE , it was held that supply of tractor trailers along with trained drivers to undertake transportation of containers within terminal cannot be considered to be service provided under business support service and the demand raised under the said category was unsustainable - the appellant cannot be held to have received the services of infrastructural support service and no tax liability would rest upon them. Time limitation - HELD THAT - The demand is also barred by limitation. The issue involved is a complex issue involving interpretation of law and in the absence of any evidence to reflect mala fide on the part of the appellant, extended period would not be available to the Revenue. As such, demand along with penalty is set aside on limitation also. The appeal is allowed on merits and also on limitation.

Summary

Issues:
Interpretation of the term "Infrastructural Support Service" under the Finance Act, 1994 for hiring transponder capacity. Tax liability under reverse charge mechanism for services received from a foreign service provider. Application of the principle of noscitur-a-sociis in determining the scope of "Support Service of Business or Commerce." Invocation of extended period for confirming service tax demand. Imposition of penalties under sections 76, 77, and 78 of the Finance Act, 1994.

Analysis:
The case involved a dispute regarding the taxability of hiring transponder capacity by an appellant from a foreign service provider under the category of "Infrastructural Support Service" as defined in the Finance Act, 1994. The Commissioner had confirmed the service tax demand, interest, and penalties on the appellant based on this interpretation. The appellant contended that the hiring of transponder capacity did not fall under the definition of "Support Service of Business or Commerce" and should not be subject to service tax under the reverse charge mechanism. They argued that the transponder capacity was not an infrastructural support service but a crucial input for their main business activity of uplinking services. The appellant cited relevant case laws and Circulars to support their position, emphasizing the principle of noscitur-a-sociis in interpreting statutory provisions.

The Tribunal considered the submissions from both sides and analyzed the nature of the services provided by the foreign service provider. Referring to precedent decisions, the Tribunal held that the hiring of transponder capacity did not constitute infrastructural support services as defined in the Finance Act, 1994. The Tribunal applied the principle of noscitur-a-sociis to interpret the scope of "Support Service of Business or Commerce," emphasizing that such services should be of a supporting nature to the main business activities. The Tribunal also noted that the demand was barred by limitation due to the complex nature of the issue and the absence of evidence of mala fide intent on the part of the appellant. Consequently, the Tribunal set aside the demand, interest, and penalties imposed on the appellant.

In conclusion, the Tribunal allowed the appeal on merits and limitation, ruling in favor of the appellant. The decision rejected the Revenue's appeal and pronounced the order in open court on 20/02/2020.