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2024 (2) TMI 85 - AT - Service TaxInvocation of extended period of limitation - suppression of facts or not - classification of services - Business Support Service or not - catering commission from caterers. Invocation of Extended period of Limitation - HELD THAT - Hon ble Apex Court in the matter of M/S CONTINENTAL FOUNDATION JOINT VENTURE SHOLDING, NATHPA HP VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I 2007 (8) TMI 11 - SUPREME COURT held that suppression means failure to disclose full information with intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression - in the present case, in response to summons dated on 21.06.2006, appellant has disclosed details of transaction and after the audit for the earlier period, no show-cause notice was issued. Thereafter, based on third audit report pertaining to same transactions, show-cause notice was issued on 20.10.2009 for the period 2006-07 and hence not sustainable in law. Classification of service - HELD THAT - It is an admitted fact that for the entire amount collected from the members, service tax is paid by both the caterers on the gross amount including the amount deducted by Appellant. Though the transactions carried out by the appellant with M/s Sreenivasa Caterers and M/s Swadeshi Caterers are very similar in nature, first Appellate authority partly allowed the appeal with respect to the service rendered by M/s Sreenivasa Caterers. Further as per the law laid down by Hon ble Apex Court in the matter of STATE OF WEST BENGAL AND OTHERS VERSUS CALCUTTA CLUB LIMITED 2016 (6) TMI 476 - SUPREME COURT and in appellant s own case M/S. KARNATAKA GOLF ASSOCIATION VERSUS THE COMMISSIONER OF SERVICE TAX BANGALORE 2023 (6) TMI 1326 - CESTAT BANGALORE , benefit of small-scale exemption under Notification No. 6/2005 dated 01.03.2005 could have been extended by the Department in respect of the value of taxable services, if any and the appellant would be entitled to cum tax value benefit in terms of Section 67 of the Finance Act, 1994, also. The confirmation of demand of service tax with interest and imposition of penalty are not sustainable. Hence, the Appeal is allowed.
Issues Involved:
1. Classification of services provided by the appellant. 2. Invocation of extended period of limitation. 3. Entitlement to small-scale exemption and cum-tax benefit. 4. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994. Summary: Issue 1: Classification of Services Provided by the Appellant The appellant, M/s Karnataka Golf Association, engaged caterers for providing services to its members and deducted a percentage as a share for providing facilities. The Department issued a Show Cause Notice (SCN) alleging that this deduction falls under "support service of business or commerce" and demanded service tax under this category. The Adjudication authority confirmed the demand and imposed penalties. The First Appellate Authority partially allowed the appeal concerning services by M/s Sreenivasa Caterers but upheld the demand for M/s Swadeshi Caterers. The appellant contended that the transactions with both caterers were identical and that service tax had already been paid by the caterers on the gross amount. Issue 2: Invocation of Extended Period of Limitation The appellant argued that the demand was barred by limitation, citing that the Department was aware of the transactions since 2006. They referenced multiple audits and inquiries where the transactions were disclosed, and no SCN was issued until 2009. The Tribunal, referencing the case of Commissioner of Service Tax, Chennai Vs. M/s Rani Meyyammal Hall, found that there was considerable laxity on the part of the Department and that the extended period of limitation could not be invoked due to the lack of suppression of facts. Issue 3: Entitlement to Small-Scale Exemption and Cum-Tax Benefit The appellant argued that even if the extended period could be invoked, they were entitled to small-scale exemption under Notification No. 6/2005 and cum-tax benefit under Section 67 of the Finance Act, 1994. The Tribunal agreed, citing the appellant's own case and the law laid down by the Hon'ble Apex Court in the M/s Kolkata Club case. Issue 4: Imposition of Penalties The appellant contended that penalties should not be imposed as the issues were interpretative, and there was no intent to evade tax. They cited various judgments to support their claim that penalties under Sections 76 and 78 are mutually exclusive and that there was reasonable cause for non-payment of service tax. The Tribunal found merit in these arguments and concluded that the imposition of penalties was not sustainable. Conclusion: The Tribunal found that the confirmation of the demand of service tax with interest and the imposition of penalties were not sustainable. The appeal was allowed with consequential relief in accordance with the law.
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