2023 (10) TMI 116 - AT - Service Tax

Invocation of larger period of limitation under proviso to section 73(1) of FA Act - HELD THAT - From the perusal of the letters/communication, it is found that the appellant seriously contested the chargeability to tax under supply of tangible goods service, but however, only after much persuasion did the assessee pay the tax along with interest. Hence, such payment of tax and interest is certainly not a voluntary act; it is a different matter altogether that the assessee did not collect the Service Tax from its customer. Also, the fact remains that the assessee was aware of the change in law with the introduction of supply of tangible goods service with effect from 2008, when admittedly, a tangible goods is being leased/rented, or given to use, without thereby transferring the right of possession or effective control over the same. If there was any genuine doubt, the only option perhaps was to pay the tax instantly and upon being pointed out, and then seek clarification from a tax expert or the Department. The very fact that the appellant is contesting the issue of invoking larger period of limitation, that the rendering of service under the supply of tangible goods is accepted; but for survey, persuasion, etc., by the officials, the tax would have remained unpaid amounting to evasion of duty. The other fact that the rendering of service and the receipt is not shown in the ST-3 return thus clearly amounts to suppression of facts; and hence, it is a clear case of suppression of facts with intent to evade tax payment. There are no justifiable reasons to interfere with the invocation of extended period of limitation and hence, the same is held to be in order - appeal dismissed.

Summary

Issues involved:
The issues involved in the judgment are the leviability of Service Tax under 'supply of tangible goods for use' service and the invocation of the larger period of limitation under proviso to section 73(1) of the Act.

Leviability of Service Tax under 'supply of tangible goods for use' service:
The appellant had leased an aircraft to another company for exclusive use, and the Revenue contended that this constituted a 'supply of tangible goods for use' service. The Revenue issued a Show Cause Notice in 2010 proposing to demand Service Tax under this category. The original authority confirmed the demands proposed in the Show Cause Notice, leading the appellant to appeal the decision. The appellant argued against the invocation of the extended period of limitation, stating that the Show Cause Notice was issued after the period of limitation. The appellate authority upheld the demand, resulting in the appellant filing an appeal before the forum.

Invocation of the larger period of limitation:
The main issue to be decided was whether the Revenue was justified in invoking the larger period of limitation under the proviso to section 73(1) of the Act. The appellant contested the chargeability to tax under the 'supply of tangible goods for use' service but eventually paid the tax along with interest after persuasion from the Department. The appellant's payment of tax and interest was not voluntary, indicating a lack of intent to evade tax. However, the appellant's failure to collect Service Tax from its customer and the non-disclosure of the service in the ST-3 return raised concerns about suppression of facts with the intent to evade tax payment. The forum concluded that there were no justifiable reasons to interfere with the invocation of the extended period of limitation, leading to the dismissal of the appeal.