2023 (7) TMI 951 - AT - Service Tax

Extended period of limitation - Non-payment of Service Tax - value of the tower supplied free by various clients was not included in the assessable value - benefit of N/N.19/2003-ST dated 21.08.2003 and N/N.1/2006-ST dated 01.03.2006 - HELD THAT - The Adjudicating Authority though finds that the exemption contained in Notification No.19/2003-ST dated 21.07.2003 and Notification No.1/2006-ST dated 01.03.2006 is not applicable to the respondents as the service receiver has not supplied any plant, machinery or equipment - However, learned Adjudicating Authority holds that the issue is time barred. There is considerable force in the argument of the Adjudicating Authority. Moreover, the submissions of learned Counsel for the respondents based on the Manual for Scrutiny of Service Tax Returns make it clear that it was incumbent upon the Department to scrutinise the records of the respondent and to raise any queries, in case they are not satisfied with the Returns, In the instant case, it is seen that no queries of any sort have been raised or no mistakes were pointed out by the Department on the basis of the scrutiny of the Returns of the respondent. Under the circumstances, it is not open to the Department to allege that there has been wilful suppression of material facts on the part of the respondent. Tribunal has gone into the very same issue, in respect of the respondent s office in Delhi, in respect of show-cause notice issued on similar lines, and vide in case 2016 (3) TMI 783 - CESTAT NEW DELHI have upheld the order of the Adjudicating Authority who dropped the proceedings, holding that no service tax is leviable on the works contract during the period prior to 1.6.2007 and remand the case for de novo adjudication only in respect of such contracts which were pure sweat contract, if any. The issue is loaded in favour of the respondents both on limitation and merits. In the instant case, the issue of merit is not under consideration. Extended period of Limitation - HELD THAT - Learned Adjudicating Authority has correctly found that there is no suppression and hence, the provisions of Section 73 of Finance Act, 1994 are not attracted to invoke extended period - the impugned order is legally correct and tenable and that the Revenue s appeal is not maintainable and is liable to be dismissed. Appeal of Revenue dismissed.

Summary

Issues Involved:
1. Whether the impugned show-cause notices are time-barred.
2. Whether the Adjudicating Authority was correct in holding that there was no suppression of facts by the respondents.

Summary:

Issue 1: Time-Barred Show-Cause Notices
The main issue under consideration was whether the show-cause notices issued to the respondents were time-barred. The respondents argued that all facts regarding the assessment of service tax were disclosed in their ST-3 returns, which were filed on time and included the fact of availing abatement from the gross value. The Adjudicating Authority examined the returns and concluded that the practice of availing abatement was made known to the department through these returns. There was no allegation in the show-cause notices that the ST-3 returns were incorrect or incomplete. Consequently, the Adjudicating Authority held that the extended period of limitation could not be invoked as there was no suppression of facts, fraud, or willful misstatement by the respondents.

Issue 2: Suppression of Facts
The Department contended that the respondents had not included the value of plant, machinery, or equipment in the gross value charged and thus were required to pay service tax on the gross value without availing the benefit of abatement. They argued that the respondents had suppressed material facts, which justified invoking the extended period and penalties under Section 78 of the Finance Act, 1994. However, the Adjudicating Authority found that the respondents had disclosed all necessary information in their returns and that it was the department's responsibility to scrutinize these returns. The Tribunal agreed, noting that no queries or objections were raised by the department based on the returns filed by the respondents. Therefore, the Tribunal concluded that there was no suppression or mis-declaration by the respondents.

Conclusion:
The Tribunal found in favor of the respondents on both issues. It held that the show-cause notices were time-barred and that there was no suppression of facts by the respondents. The Tribunal dismissed the appeal, upholding the Adjudicating Authority's order that the extended period of limitation under Section 73 of the Finance Act, 1994, was not applicable. The appeal was pronounced dismissed in the open court on 20/07/2023.