2023 (11) TMI 219 - AT - Service Tax

Non-payment of Service Tax - man power recruitment and supply agency service - Security Services under RCM - Goods Transport Agency Service (GTA) under RCM - invocation of extended period in terms of proviso to Section 73(1) of the Finance Act, 1994 - HELD THAT - The appellant is required to produce necessary evidence to the Departmental authorities regarding payment of Service Tax collected from the appellant by the service providers to Government account. So, it becomes necessary to remand the issue of demand of Service Tax on Manpower Recruitment and Supply Agency Service and Security Service to the original adjudicating authority for carrying out verification of copies of ST-3 returns filed by the service providers / documents or any certificate or declaration to pass a speaking order in strict observance of principles of natural justice. The appellant is also directed to produce any of these evidences after collecting from the service providers to ensure that the Service Tax collected was in fact paid to the Government account. Invocation of extended period - HELD THAT - The appellant has produced many copies of the invoices raised by the service providers of Manpower Recruitment and Supply Agency Services and also Security Services. It is no more res integra that extended period can be invoked only when there are ingredients necessary to justify the demand for the extended period in a case leading to short payment or non-payment of tax. The onus of establishing that such ingredients are present in a given case is on the Revenue. The active element of intent to evade duty by action or inaction needs to be present for invoking extended period - invoking extended period is not justified in this case. The demand of Service Tax for extended period is not maintainable. Even for normal period, the issue of demand of Service Tax on Manpower Recruitment and Supply Agency Service, Security Service and Goods and Transport Agency Service is remanded to the original adjudicating authority to carry out verification of evidences the appellant provides whether the Service Tax paid by the service providers have been deposited to the Government account or not and pass orders in compliance to the strict principles of natural justice. Appeal disposed off.

Summary

Issues Involved:
1. Confirmation of Service Tax demands for Manpower Recruitment and Supply Agency Service, Security Service, and Goods Transport Agency Service under Reverse Charge Mechanism (RCM).
2. Invocation of the extended period under the proviso to Section 73(1) of the Finance Act, 1994.

Summary:

Issue 1: Confirmation of Service Tax Demands under RCM

The appellant, M/s. Indian Medical Practitioners Co-Operative Pharmacy & Stores Limited, was audited for the period from August 2012 to June 2017, revealing non-payment of Service Tax on various services under RCM. A Show Cause Notice was issued demanding Service Tax on Manpower Supply and Agency Services, Security Services, Goods Transport Agency Services, and Notice-Pay. The original adjudicating authority confirmed these demands, but on appeal, the Commissioner of GST and Central Excise (Appeals) upheld the demand for Manpower Recruitment and Supply Agency Services and remanded the demand for GTA services, setting aside the demand for Notice-Pay.

The appellant argued that Service Tax was paid to the service providers, who were registered with the Service Tax Department, and demanding the same tax again would result in double taxation. The appellant cited several judicial precedents supporting their claim that double taxation is impermissible. However, the lower authorities observed that the appellant failed to provide adequate proof, such as challans, ST-3 returns, or agreements with service providers, to substantiate their claim.

The Tribunal held that the appellant must produce necessary evidence to the Departmental authorities showing that the Service Tax collected by the service providers was paid to the Government. The issue was remanded to the original adjudicating authority for verification of such evidence.

Issue 2: Invocation of Extended Period under Section 73(1) of the Finance Act, 1994

The Show Cause Notice covered the period from October 2012 to June 2017, invoking the extended period under Section 73(1) of the Finance Act, 1994. The appellant argued that the extended period could only be invoked in cases of intentional evasion, which was not applicable as they had paid the Service Tax to the service providers.

The Tribunal found that the appellant had produced invoices showing payment of Service Tax to the service providers, indicating no intent to evade tax. Therefore, invoking the extended period was deemed unjustified. The Tribunal held that the demand for the extended period was not maintainable and remanded the case to the original adjudicating authority to verify whether the Service Tax paid by the service providers was deposited to the Government account.

Conclusion:

The appeal was disposed of with directions to the original adjudicating authority to verify the appellant's evidence regarding the payment of Service Tax by the service providers and to pass a speaking order in compliance with the principles of natural justice. The demand for the extended period was not upheld.