2023 (10) TMI 600 - AT - Service Tax

Classification of services - Business Auxiliary Service or not - supply of bed rolls to the passengers of trains during their journey in Air Condition / First class compartments of trains running in different sectors - SCN dated 9/6/2011 is issued for the period 2006-07 and 2007-08 - time limitation - suppression of facts or not - HELD THAT - On perusal of the Show Cause Notice, it is found that there is no averment that the notice is issued invoking the extended period. There is no whisper that the appellant has suppressed facts with intend to evade payment of tax. So also, the proviso to Section 73 (1) has not been mentioned or invoked in the Show Cause Notice. In such circumstances, Show Cause Notice which is not issued within the normal period cannot sustain. The notice issued is therefore time barred. In the SCN it is alleged that the activity of providing bed rolls would fall under clause (vi) of the definition under Section 65 (19). The appellant is not providing any service on behalf of IRCTC. The appellant is providing service to M/s. IRCTC. There is no amount collected by the appellant from the passengers. In fact, the services are provided to M/s. IRCTC and amount is also collected from M/s. IRCTC. For this reason, the activity cannot be considered as a service provided on behalf of a client. On merits also the demand cannot sustain and requires to be set aside. The appellant succeeds on merits as well as on limitation. The impugned order is set aside - Appeal allowed.

Summary

Issues:
The issues involved in the judgment are the time bar on the Show Cause Notice and the classification of services under Business Auxiliary Service.

Time Bar on Show Cause Notice:
The appellant did not discharge the service tax liability for the period 2006-07 to the tune of Rs.87,212. The Show Cause Notice was issued proposing to demand the tax amount under Section 73 (1) of Finance Act 1994 along with interest and penalties. The appellant argued that the Show Cause Notice dated 9/6/2011 did not mention the appellant's suppression of facts with intent to evade payment of tax, nor did it invoke the proviso to Section 73 (1). The appellant contended that the notice was time-barred as it did not mention the extended period or suppression of facts. The tribunal agreed that the Show Cause Notice was time-barred due to these deficiencies.

Classification of Services under Business Auxiliary Service:
The department demanded the amount under Business Auxiliary Service as defined in Section 65 (19) of Finance Act 1994. The appellant argued that the services provided did not fall under clause (vi) of the definition of Business Auxiliary Services, which relates to 'provision of service on behalf of the client.' The appellant contended that they were providing bed rolls directly to M/s. IRCTC and not on behalf of IRCTC. The tribunal agreed with the appellant, stating that the appellant was not providing services on behalf of IRCTC but to IRCTC directly. Therefore, the demand under Business Auxiliary Service could not be sustained, and the appeal was allowed on merits as well as on limitation.

Conclusion:
The tribunal set aside the impugned order, allowing the appeal with consequential relief if any, on 13.10.2023.