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2023 (6) TMI 697 - AT - Service TaxTime Limitation - Validity of Show Cause Notice - SCN issued for two times, initially with the view that the service involved of Intellectual Property Service and subsequently treating the service as Consulting Engineering Service - period Covered by both SCN were different - HELD THAT - The contract was same on the basis of which demand was raised earlier and was dropped, therefore, the department was in knowledge of the contract and all its conditions and its contents. The department had earlier raised the demand as Intellectual Property Service which could not sustain and in the impugned period has tried classifying the same under Consulting Engineer Service. This seems to be inconsistent view of the department itself and cannot be attributed as intent to evade on the part of the assessee. Even otherwise on merits, the view as propounded by the learned Advocate agreed upon, that technical knowhow service provided did not make the service Consulting Engineering Service . Same was also covered by Government specifically w.e.f. 10.09.2004 as Intellectual Property Service , thus even on merits demand under Consulting Engineering Service cannot sustain. The contract already having been in the knowledge of the department and department having applied its mind differently in two show cause notices, the extended period of limitation too cannot sustain. Appeal allowed.
Issues:
1. Grounds of appeal based on limitation and merits. 2. Classification of service under Consulting Engineering Service. 3. Justification of demand by the department. 4. Consistency in department's views on service classification. 5. Interpretation of technical knowhow service as Consulting Engineering Service. 6. Application of limitation period. Analysis: The appeal before the Appellate Tribunal CESTAT Ahmedabad was based on the grounds of limitation and merits. The department had issued a show cause notice demanding duty for the period 2005-06 to 2009-10 under Consulting Engineering Service. The appellant argued that a previous show cause notice for a different period had been discharged by the Tribunal due to the service being classified as Intellectual Property Service until the introduction of section 66A on 01.04.2006. The department issued a sequel show cause notice for a different period treating the service as Consulting Engineering Service. The appellant contended that the service involved paying royalty for technical knowhow, classified as Intellectual Property Service since 10.09.2004. The appellant relied on previous tribunal decisions and legal precedents to support their case. The Authorized Representative opposed the demand, stating that the assessee had intermittently not paid service tax despite a previous demand. The department justified the classification of service as Consulting Engineering Service based on the Commissioner (Appeals) order. The Tribunal analyzed the merits of the case and the limitation period. It noted that the department had earlier raised a demand as Intellectual Property Service, which was dropped, and later tried to classify it under Consulting Engineering Service. The Tribunal found this inconsistent and held that the technical knowhow service provided did not fall under Consulting Engineering Service but was covered under Intellectual Property Service since 10.09.2004. The Tribunal concluded that the department's varying views and the knowledge of the contract indicated no intent to evade on the part of the assessee. Therefore, the demand under Consulting Engineering Service was dropped, and the appeal was allowed based on the merits and limitation period considerations. In the final judgment, the Tribunal ruled in favor of the appellant, highlighting the inconsistency in the department's classification of services and the lack of intent to evade on the part of the assessee. The Tribunal concluded that the demand under Consulting Engineering Service was not sustainable, considering the previous knowledge of the contract and the service's classification as Intellectual Property Service. Consequently, the demand was dropped with consequential relief granted to the appellant.
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