2023 (4) TMI 431 - AT - Service Tax

Time barred demand - Demand of differential amount of service tax - works contract service - demand on the ground that the appellant has availed in-eligible benefit of notification by discharging the service tax liability by availing abatement of 67% and paid service tax only on the 33% of the gross amount of the bills - HELD THAT - Appellant had been filing the ST-3 returns regularly to the Jurisdictional Range officers. It is on record that the said Service tax returns were scrutinized by the Jurisdictional officer on 17.01.2008 and he pointed out that there is short payment of service tax of Rs. 87,740/- - the fact that the appellant were charging service tax on 33% value after availing abatement on their services till 31st May 2007 and w.e.f. 01.06.2007 they have charged service tax on gross amount of contract @2% was in the knowledge of the Revenue itself from ST-3 returns. However show cause notice to the Appellant was issued on 02.03.2010. Inasmuch as the entire information was in the knowledge of the Revenue, the longer period of limitation is not available. In view of the facts the show cause notice should have been issued within the normal period of one year as prescribed under Section 73(1), whereas the show cause notice for the period 16.06.2005 to 30.09.2007 was issued on 02-03-2010 i.e. after prescribed limit of one year - there is no suppression of fact on the part of the appellant. Therefore, the demand raised in the show cause notice is clearly time-barred. Appeal allowed - decided in favour of appellant-assessee.

Summary

Issues Involved:
The issues involved in this case are the demand of differential amount of service tax for the period 16.06.2005 to 30.09.2007, eligibility for works contract service, availing of abatement benefits, and the imposition of penalties under Section 76, 77, and 78 of the Act.

Summary:
The case involved M/s. Crystal Metals Pvt. Ltd., providing taxable services falling under 'Commercial or Industrial Construction Service.' The appellant was found to have short paid service tax, leading to a demand notice for recovery of Rs. 14,80,525/- along with interest and penalties. The Order-In-Original confirmed the demand, which was upheld by the Commissioner (Appeals), except for waiving the penalty under Section 76. The appellant contended that their services were always execution of works contract, even prior to 01.06.2007, and therefore, the tax liability only arose from that date. They argued that the activities undertaken were classified as works contract even before 01.06.2007 for VAT purposes. The appellant also claimed benefit under Notification No. 12/2003-ST for material consumed in providing services. The issue of limitation was raised, stating that the show cause notice issued on 02.03.2010 for the period 16.06.2005 to 30.09.2007 was time-barred as the Revenue was aware of the appellant's tax payments under the composition scheme. The Tribunal held that the demand was time-barred as the show cause notice was issued after the prescribed limit of one year, and there was no suppression of facts on the appellant's part. Consequently, the impugned order was set aside, and the appeal of the appellant was allowed, dismissing the appeal filed by the revenue.

Separate Judgement:
The Tribunal comprising MR. RAMESH NAIR, MEMBER (JUDICIAL) and MR. RAJU, MEMBER (TECHNICAL) pronounced the judgment on 06.04.2023.