2021 (9) TMI 460 - AT - Service Tax

Short payment of Service Tax - manpower recruitment or supply agency service - tax paid only on 75% of gross service value under reverse charge mechanism as per the provisions of N/N. 30/2012-ST dated 20th June, 2012, whereas liability was of 100% - suppression of facts or not - Extended period of limitation - HELD THAT - The non-payment by the appellant for the said period is merely due to his bonafide belief of his liability to the extent of paying the service tax at 75% of the service value. Once there is no apparent malafide on part of the appellant and in view of the aforesaid bonafide belief of the appellant, fastening the allegations as that of concealment fraud and suppression are held to be highly unjustified. The alleged non-payment cannot be called as willful or intentional act of the appellant to evade the payment of duty. Otherwise also, there is no denial on part of the Department that the balance service tax on 25% value of the service has already been paid by the service provider. The Department, thus, has received 100% tax amount on the impugned transaction. Confirming such liability again under the pretext of the amendment of the applicable Notification will be nothing but will amount to receiving tax twice for the same transaction. Extended period of limitation - HELD THAT - Without going into the other merits of the status of appellant as to whether it is a business entity or a body Corporate or a charitable trust, it is made clear that the appellants liabilities stands already discharged. The demand should not have been confirmed - the Department was not entitled to invoke the extended period of limitation for no willful suppression on part of appellant that too with intent to not to pay duty (full duty already stands paid). Appeal allowed - decided in favor of appellant.

Summary

Issues:
Short payment of Service Tax under reverse charge mechanism; Allegation of intentional evasion; Dispute regarding liability to pay Service Tax; Applicability of Notification No.30/2012 and Notification No.07/2015; Allegation of suppression of facts; Invocation of penalty; Interpretation of "suppression of facts" in tax laws; Burden of proof on Revenue; Willful intent to evade duty; Double taxation concern; Extended period of limitation for recovery.

Analysis:
The case involves a dispute regarding the payment of Service Tax by the appellant under the reverse charge mechanism for services received from a manpower recruitment or supply agency. The Department alleged a short payment of Service Tax amounting to ?71,440 and proposed recovery through a Show Cause Notice. The appellant contended that they had paid tax on 75% of the service value as per the initial Notification, but the Department claimed the liability was for 100% as per the amended Notification. The appellant argued that the change in liability was sudden, and there was no intentional evasion. The appellant also cited exemption under a Mega Exemption Notification for education institutes.

During the hearing, the appellant reiterated their stance, while the Department argued that the appellant failed to provide evidence to support their claims. The Tribunal observed that the appellant had admitted liability for 75% tax, which was later amended to 100%. The Tribunal noted the sudden change in liability and the appellant's bonafide belief in paying the lower tax rate. The Tribunal referenced legal precedents to explain the strict interpretation of "suppression of facts" in tax laws, emphasizing the need for willful intent to evade duty.

The Tribunal concluded that the appellant's non-payment was not willful, and the Department had already received the full tax amount from the service provider. Confirming the liability again would lead to double taxation. The Tribunal found the demand unsustainable and the extended period for recovery beyond limits. The Show Cause Notice for recovery was deemed time-barred. The order under challenge was set aside, and the appeal was allowed.

In summary, the Tribunal ruled in favor of the appellant, highlighting the lack of willful intent to evade duty, the absence of suppression of facts, and the concern of double taxation. The decision emphasized the importance of bonafide belief and compliance with tax laws, ultimately setting aside the demand and allowing the appeal.