2024 (4) TMI 228 - AT - Service Tax

Extended period of Limitation - suppression of facts or not - Recovery of service tax alongwith interest and penalty - whether the services provided by the appellant shall be classified under the category of internet telecommunication services as per Section 65 (57a) of the Finance Act, 1994 for the purpose of levy of service tax? - HELD THAT - The period of demand is from April 2008 to June 2012, as after the change in regime of levy service tax to negative list of services, appellant started paying the service tax on the said services received by them. All the facts including the documents, balance-sheet and other records pertaining to the disputed services were in knowledge of the Revenue and also audited during the course of audit for the period February 2010. There is correspondence also available at Page 89 90 of the paper-book whereby information in respect of audit objection was called from the appellant vide letter dated 16.03.2011 which was responded by the letter dated 19.05.2011 when the entire issue was in correspondence as a sequel of audit conducted Revenue could not have proceeded to issue a notice by invoking extended period of limitation alleging suppression. There are no reason for which an extended period of limitation could have been invoked in the present case the entire demand should fail on this ground itself. Without going into the merits of the case for which learned counsel submits there are certain decisions in their favour, it is held that demand is barred completely by limitation. Since the demand is barred by limitation the penalties imposed on the appellant too are set aside. Appeal allowed.

Summary

Issues Involved:

1. Classification of services under "Internet Telecommunication Services."
2. Applicability of extended period of limitation due to alleged suppression of facts.
3. Imposition of penalties under various sections of the Finance Act, 1994.

Summary:

1. Classification of Services:

The primary issue was whether the services provided by the appellant should be classified under the category of "Internet Telecommunication Services" as per Section 65(57a) of the Finance Act, 1994, for the purpose of levying service tax. The definition of "Internet Telecommunication Service" is inclusive and not exhaustive, covering services such as internet backbone services, internet access services, and telecommunication services over the internet. The appellant argued that the services received were "Telecommunication Services," not "Internet Telecommunication Services." However, the tribunal noted that the appellant was the service recipient and required to pay service tax under the reverse charge mechanism u/s 68(2) of the Finance Act, 1994.

2. Applicability of Extended Period of Limitation:

The appellant contended that the extended period of limitation was not invocable as there was no suppression of facts. The tribunal found that the show cause notice did not lay down the grounds for invoking the extended period of limitation as per the proviso to Section 73(1) of the Finance Act, 1994. The tribunal referred to several judgments, including Pushpam Pharmaceuticals Co. and Anand Nishkawa, which emphasized that suppression of facts must be deliberate and not merely an omission. The tribunal concluded that the extended period of limitation could not be invoked as the facts were known to both parties and there was no deliberate non-disclosure.

3. Imposition of Penalties:

Given that the demand was barred by limitation, the tribunal held that the penalties imposed on the appellant u/s 77 and 78 of the Finance Act, 1994, were also set aside. The tribunal noted that the appellant had provided all the necessary information during the audit and there was no willful suppression of facts.

Conclusion:

The tribunal allowed the appeal, holding that the demand was barred by limitation and set aside the penalties imposed on the appellant. The tribunal did not delve into the merits of the case, as the issue of limitation was sufficient to decide the appeal in favor of the appellant.