2022 (11) TMI 950 - AT - Service Tax

Demand beyond the scope of the Show Cause notice (SCN) - Extended period of limitation - wilful suppression of facts - non-payment of service tax - appellant preferred appeal before the Commissioner (Appeals) inter alia on the ground that the demand is not sustainable for want of classification of the service - eligibility for SSI exemption under Notification No. 6/2005-ST - HELD THAT - The appellant had taken suo moto registration in November 2016 and had started making compliance by filing Return and depositing admitted tax w.e.f. 01/10/2016. Further, the appellant have maintained proper records of its transactions and turnover. They have also filed their IT-returns. Further, the appellant had admittedly taken suo moto registration under Service tax provision. In the circumstances, there is no suppression or failure on the part of the appellant to make compliance under the service tax provisions. Rather revenue have chosen to not make any enquiry for the period prior to 01/10/2016, soon after taking of registration in November 2016. Thus, allegation of revenue that appellant have concealed its particulars of turnover from service tax department, and revenue came to know upon receipt of information only in 2019 on the basis of data received from the Income Tax Department is vague and frivolous. Thus, the show cause notice is bad for invocation of extended period of limitation. Further, during the period under dispute, almost the whole turnover for providing service is in respect to work done in packing plant-maintenance job for Shree Cement Ltd- manufacturer of cement. Admittedly, service has been provided inside the factory premises by providing JCB - the appellant was to provide competent operating staff to operate the JCB. Further, the JCB was to be operated as per the guidance and instructions of the engineer of the service recipient. Further, the appellant have received the hire charges for JCB, through bank and have also maintained proper records. Also Clause (f) of Section 66D provides that services by way of carrying out any process amounting to manufacture or production of goods, falls under the negative list and is exempted from the levy of service tax. The classification of service under Works Contract Service by the Commissioner (Appeals) is beyond the scope of show cause notice, and is held to be bad. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of service for service tax liability, invocation of extended period of limitation, imposition of penalty, eligibility for SSI exemption under Notification No. 6/2005-ST.

Classification of Service for Service Tax Liability:
The appellant, engaged in civil construction/works contract service, was issued a show cause notice based on information from the Income Tax Department regarding their gross turnover. The revenue demanded service tax and penalty, alleging wilful suppression of facts. The appellant argued that the demand lacked sustainability due to the absence of service classification, which is crucial for determining tax liability. The Commissioner (Appeals) classified the service as Works Contract Service without prior notice to the appellant, leading to the dismissal of the appeal. The appellant contended that proper classification is essential for defense and legal implications. The Tribunal held that the classification under Works Contract Service was beyond the scope of the show cause notice, rendering it unsustainable.

Invocation of Extended Period of Limitation:
The appellant registered with the service tax department in November 2016, initiated compliance, and maintained records. The revenue issued a show cause notice in 2019 based on information from the Income Tax Department, alleging suppression of turnover details. The Tribunal found no suppression or failure on the appellant's part in compliance with service tax provisions. It held that the show cause notice invoking the extended period of limitation after more than three years was invalid, as the appellant had proactively registered and complied with tax requirements.

Imposition of Penalty:
The Assistant Commissioner confirmed the demand and imposed penalties under various sections. The appellant argued against the penalties, stating that there was no deliberate default and that the demand itself lacked sustainability. The Tribunal, considering the appellant's compliance efforts, found no grounds for penalty imposition, especially as the appellant had taken registration and disclosed relevant turnover information.

Eligibility for SSI Exemption under Notification No. 6/2005-ST:
The appellant claimed eligibility for Small Scale Industry (SSI) exemption under Notification No. 6/2005-ST. The Tribunal did not provide specific details regarding this exemption in the judgment but allowed the appeal based on other grounds.

In conclusion, the Tribunal allowed the appeal, set aside the impugned order, and granted the appellant consequential benefits in accordance with the law, emphasizing the importance of proper classification, compliance, and the invalidity of the extended period of limitation in this case.