2023 (10) TMI 816 - AT - Service Tax

Invoking proviso to sub-section (1) of Section 73 of Finance Act, 1994 for extended period - Levy of service tax - composite supply - photography service - inclusion of VAT in the value of photography service for the purpose of imposition of service tax - HELD THAT - During the period before 14.05.2016, normal period of limitation was 18 months. The show cause notice dated 12.03.2014 was issued for the period from 01.10.2008 to 31.03.2013. Therefore, the normal period that can cover the issue in the present case is only from 01.10.2012 to 31.03.2013. However, there is no show cause issued to the appellant under main clause of sub-section (1) of Section 73 of Finance Act, 1994 and also that the entire information was disclosed by the appellant through ST-3 return. Therefore, there was no suppression on the part of the appellant. The extended period of limitation was not invokable in the present case. Had Revenue scrutinized ST-3 return in time, they could have issued demand during the relevant period under normal period of limitation and once the normal period of limitation is over after filing of ST-3 return, then the self-assessed assessment is finalized and was not open for raising demand. Thus the subject show cause notice is hit by limitation - the merit of the case not examined. Appeal allowed.

Summary

Issues involved:
The issues involved in this case are related to the payment of service tax by the appellant, the discrepancy in the tax components reflected on the invoices, the invocation of the extended period of limitation by the Revenue, and the imposition of penalties.

Payment of Service Tax:
The appellant registered for service tax payment declaring engagement in providing photography services taxable under Section 65(79) of the Finance Act, 1994. The appellant filed ST-3 returns and paid service tax amounting to Rs.3,69,188 during the period from 01.10.2008 to 31.03.2013. However, a discrepancy was noted by the Revenue in the tax components reflected on the invoices and the value declared in the ST-3 returns.

Invocation of Extended Period of Limitation:
The Revenue issued a show cause notice invoking the proviso to sub-section (1) of Section 73 of the Finance Act, 1994 for the extended period, demanding service tax of Rs.14,78,864 for the period mentioned. The Revenue alleged that the appellant willfully suppressed the material fact of consideration received by them, leading to proposals for the imposition of penalties.

Imposition of Penalties:
The original authority confirmed the demand for service tax and imposed various penalties on the appellant. The appellant appealed before the learned Commissioner (Appeals) arguing the case on limitation, which was rejected. The appeal was then brought before the Tribunal by the appellant.

The Tribunal, after hearing arguments from both parties, analyzed the case and the show cause notice issued by the Revenue. It was observed that the normal period of limitation for the period in question was from 01.10.2012 to 31.03.2013. As there was no show cause notice issued under the main clause of sub-section (1) of Section 73 of the Finance Act, 1994, and all information was disclosed by the appellant through ST-3 returns, the extended period of limitation was deemed not invokable. The Tribunal held that the show cause notice was hit by limitation and that the Revenue could not demand service tax already paid through self-assessment via ST-3 returns. Therefore, the Tribunal set aside the impugned order and allowed the appeal without interfering with the amount of service tax already paid by the appellant.

(Separate Judgement by the Judges:
The judgment was delivered by Dr. Suvendu Kumar Pati, Member (Judicial), and Mr. Anil G. Shakkarwar, Member (Technical). The learned counsel for the appellant argued the appellant's bona fide belief regarding the taxation of material consumed and the service portion. The Tribunal's decision was based on the lack of suppression by the appellant and the incorrect invocation of the extended period of limitation by the Revenue. The Tribunal's ruling highlighted the importance of timely scrutiny of ST-3 returns by the Revenue to avoid erroneous demands and to respect the self-assessment process.