2022 (1) TMI 208 - AT - Service Tax

Reverse charge mechanism - GTA service - appellant were proprietorship concerns - section 68(2) of the Act r/w Notification 30/2012-ST dated 20.6.2012 - Extended period of limitation - HELD THAT - It clearly shows that the department had full knowledge about the activities of the appellant way back in the year 2016 itself therefore in my view the plea of suppression or non-disclosure with intent to evade service tax is not available to the department. It is settled legal position that mere failure to declare does not amount to mis-declaration or willful suppression and therefore extended period cannot be invoked in such a situation. There is no evidence of fraud or suppression of fact. The certificates, issued by the respective State Governments, to the effect that the said proprietary concerns are registered as Factories have also been submitted by the Appellant before the authorities concerned and before me as well. A perusal of the same will lead to inevitable conclusion that the proprietary concern to whom GTA services were provided by the appellant, were authorized dealers of Piggio Auto and were registered as factories therefore in view of Section 68(2) ibid read with Notification (supra) those they are liable to pay service tax under reverse charge mechanism. Therefore the demand for the period April, 2016 to June, 2017 is also liable to be set aside. Although the appellant has also raised the issue of threshold exemption under notification no.33/2012-ST dated 20.62012 but as it is already held that since those proprietary concerned have been registered as factories, they are liable to pay service tax under reverse charge mechanism, therefore the issue of threshold exemption, is not decided upon. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Extended period of limitation invoked by the department for service tax demand.
2. Liability of the appellant to pay service tax on GTA services provided to proprietary firms.
3. Applicability of Reverse Charge Mechanism for service tax payment.

Analysis:
1. The department alleged that the appellant did not discharge their service tax liability for services provided from 2013-14 to 2016-17. The appellant argued that the department had prior knowledge of their activities, thus the extended period of limitation was wrongly invoked. The tribunal held that mere failure to declare does not constitute suppression, and extended period cannot be invoked without evidence of fraud. Consequently, the demand for the period 2013-14 to 2015-16 was quashed due to lack of evidence supporting suppression or non-disclosure.

2. For the period from April 2016 to June 2017, the department demanded service tax on GTA services provided to proprietary firms, claiming Reverse Charge Mechanism did not apply to them. The appellant contended that the proprietary firms were registered as factories under the Factories Act, making them liable to pay service tax under reverse charge. The tribunal examined certificates confirming the firms' factory registration and concluded that they were indeed liable under reverse charge. Therefore, the demand for this period was set aside in favor of the appellant.

3. The appellant also raised the issue of threshold exemption under a specific notification, but the tribunal did not address it as the liability under reverse charge mechanism was established. Ultimately, the tribunal allowed the appeal filed by the appellant, providing consequential relief as per the law.

This detailed analysis of the judgment highlights the key issues of extended period of limitation, liability for service tax on GTA services, and the applicability of Reverse Charge Mechanism, ultimately resulting in the appeal being allowed in favor of the appellant.