2024 (3) TMI 1280 - AT - Service Tax

Demand of service tax - SSI exemption - Construction of boundary and main gate at the sub-station at Dhaka and Gopalganj - time limitation - demand alongwith interest and penalty - HELD THAT - The impugned order has confirmed the demand of service tax of Rs.78,341/- on the amount of Rs.21,60,967/- received by the Appellant from PGCIL. Out of this Rs.14,78,589/- was shown to have been received by the Appellant on 10.05.2008, but the Appellant submitted that this amount has been received on various dates in the year 2004-05 - the submission of the Appellant is agreed upon, that the amount of Rs.14,78,589/- was not received on 10.05.2008, but on various dates in the year 2004-05. Hence, the Notice issued on 30.09.2011 demanding service tax on these amounts received in 2004-05 is barred by limitation. Accordingly, the demand confirmed on this amount is set aside. It is observed that the amount of Rs.1,27,505/- and Rs. 2,05,234/-, totally amounting to Rs. 3,32,739/-, was received by the Appellant in the Financial Year 2006-07 and the amount of Rs.3,49,639/- was received in the Financial Year 2007-08. In both the Financial years 2006-07 and 2007-08, their turnover was below the threshold limit of Rs.10 lakhs. Accordingly, no service tax is payable by the Appellant on these receipts. Interest and penalty - HELD THAT - The demand of service tax confirmed in the impugned order is not sustainable. Since the demand of service tax is not sustainable, the question of demanding interest and penalties under sections 77 and 78 does not arise. The impugned order set aside - appeal allowed.

Summary

Issues involved: Appeal against demand of service tax, interest, and penalty confirmed in the Order-in-Original by the Commissioner (Appeals) for construction contract awarded by Power Grid Corporation of India Ltd.

Summary:
1. The appeal was filed against the Order-in-Appeal upholding the demand of service tax, interest, and penalty. The audit revealed non-payment of service tax on receipts totaling Rs.21,60,967/- from 2006 to 2008. The Appellant contested the demand, stating that certain amounts were received in earlier years and were barred by limitation.

2. The Appellant provided a detailed break-up of the receipts, showing discrepancies in the dates of payment mentioned in the Show Cause Notice. They argued that a significant amount was actually received in 2004-05, challenging the demand based on limitation.

3. The Tribunal examined the submissions and evidence presented by both parties. It was noted that a substantial portion of the total receipts was received in previous years, making the demand for service tax on those amounts invalid due to limitation.

4. Additionally, the Tribunal found that certain amounts received in the financial years 2006-07 and 2007-08 were below the threshold limit for service tax liability. Consequently, no service tax was deemed payable on these particular receipts.

5. Based on the above observations, the Tribunal set aside the impugned order, ruling in favor of the Appellant. As the demand for service tax was deemed unsustainable, no interest or penalties under sections 77 and 78 were applicable.

6. The appeal filed by the Appellant was allowed, and the impugned order was overturned, with no service tax liability established on the contested receipts.

(Operative part of the order was pronounced in open court)