2024 (2) TMI 1084 - AT - Service Tax

Demand of service tax alongwith interest and penalties - service tax not paid - late filing of returns - time limitation - HELD THAT - The service rendered by the appellant was inclusive of service tax and initially, the appellant paid the service tax, but thereafter, the appellant did not pay the service tax, but they filed S.T-3 Returns. In that circumstances, the responsibility casts on the Revenue to find out why the assessee is filing nil returns and no efforts were made by the Revenue to investigate the matter against the appellant. As per the said letter dated 20.08.2008 after verifying the records, the Revenue has observed that nothing is pending against the appellant. In that circumstances, the show-cause notice issued to the appellant on 18.02.2009, is highly time barred. The impugned demand is set aside - appeal allowed.

Summary

Issues involved: Appeal against confirmation of service tax demand u/s "Security Service" for the period April 2004 to June 2005.

Summary:

Issue 1: Impression regarding service tax payment

The Appellant provided security services to NTPC, receiving inclusive payment. Appellant believed service tax was to be paid separately, leading to non-payment. Despite filing ST-3 Returns regularly, service tax was not paid after 2005. Appellant later surrendered registration due to illness. Show-cause notice issued in 2009 for demand of service tax for 2004-2005.

Issue 2: Adjudication and penalties

Adjudication confirmed service tax demand, interest, and penalties u/s 76, 77 & 78 of the Finance Act, 1994. Commissioner (Appeals) reduced penalties. Appellant challenged the order.

Issue 3: Arguments

Appellant argued that the show-cause notice was time-barred as they believed service tax was not required to be paid separately. Revenue contended that as per the agreement, service tax was inclusive, and Appellant suppressed material facts.

Judgment:

Upon review, it was found that the service rendered by the Appellant was inclusive of service tax initially paid but later omitted. Revenue failed to investigate why nil returns were filed. Internal enquiry in 2008 confirmed no dues against the Appellant. Show-cause notice issued in 2009 was deemed time-barred. Consequently, the impugned demand was set aside, and the appeal was allowed with any consequential relief.