2024 (4) TMI 400 - AT - Service Tax

Eligibility to exemption under Notification No. 25/2012 ST which is available evidently under Serial No. 1 and 2 read with Serial No. 25(a) of the exemption notification - emergency response Services of Dial 108, 102 and 104 - services were provided to Government by way of public health in terms of Notification No. 25/2012 ST dated 20.06.2012 - Extended period of limitation - interest - penalty - HELD THAT - It is found that the Learned Commissioner in the Adjudication Order have rightly held eligibility to exemption under Notification No. 25/2012 ST which is available evidently under Serial No. 1 and 2 read with Serial No. 25(a) of the exemption notification. Further the eligibility to exemption has further been clarified by the Board vide its Circular dated 30.05.2018. It is further found that the ground raised by Learned Special Counsel for Revenue regarding bifurcation of bundled service in respect of comprehensive contract where police/fire response system was also in bundle, is only minuscule, being less than 5% and hence did not call for any bifurcations in terms of Section 66F(3)(a) of the Finance Act 1994. Admittedly Appellant have been providing services to the State Governments under written agreements. All the receipts are through the banking channel. Admittedly, Appellant have maintained proper books of accounts and records of the transactions. Appellant was also registered with the Service Tax Department and they were filing their returns and paying the admitted taxes. The Appellant assessee was under bonafide belief that the services being related to public health under NHM they are entitled to exemption under Notification No. 25/2012 ST. The assessee was also under bonafide belief that the service relating to emergency response service including for police/fire was also exempted being provided to the Government - Further evidently the Appellant on being so advised, during the course of investigation/enquiry, deposited the service tax where the receipts are under separate contract for the Police/fire services under Project 100. The Appellant have maintained proper books of accounts and records of their transactions. Services are provided to the State Government under agreements and all the receipts were through the banking channel. The Appellant is a non-profit organisation registered under Section 12AA of the Income Tax Act 1961. It is further found that the Appellant had taken suo-moto registration and were making compliance and depositing the admitted taxes. It is further found that the appellant was under bonafide belief that their services with respect to emergency response service under NHM, which is the major part of their services is exempt and has been rightly found to be exempted - under the comprehensive contracts, the Dial 100 Project police/fire was only minuscule element less than 5%. Further, admittedly the appellant have deposited the service tax where they found the same to be payable before issue of SCN along with applicable interest, for which there was proposal in the SCN itself was made for appropriation. Extended period of Limitation - penalty u/s 78 of FA - HELD THAT - The extended period of limitation is not available to revenue and accordingly the demand is confined to the normal period of limitation. The penalty under Section 78 of the Act is set aside. Appeal of assessee allowed.

Issues Involved:
1. Taxability of services rendered by the assessee.
2. Liability for service tax for the period from July 2012 to March 2017.
3. Appropriation of service tax paid for the Dial 100 Project.
4. Interest liability on the service tax amount.
5. Appropriation of interest paid.
6. Imposition of penalty u/s 78 of the Finance Act.
7. Imposition of penalties u/s 76 & 77 of the Finance Act.
8. Liability of the Director for penalty u/s 78A of the Finance Act.

Summary:

Issue 1: Taxability of Services Rendered
The Commissioner examined whether the services rendered by GVK EMRI, particularly the emergency response services through Dial 108, 102, and 104, fall under taxable services u/s 65B(44) read with (51) of the Finance Act, 1994, or are exempt under Notification No. 25/2012-ST. It was concluded that these services, provided to the State Governments under the National Health Mission (NHM), are exempt from service tax as they pertain to public health.

Issue 2: Liability for Service Tax from July 2012 to March 2017
The Commissioner found that the emergency response services linked to Dial 102/104/108 are exempt from service tax, and thus, the demand of Rs. 355,04,65,858/- for these services was dropped. However, the Dial 100 Project, which involved police emergency services, was considered taxable, and the service tax liability of Rs. 1,18,97,295/- was confirmed.

Issue 3: Appropriation of Service Tax Paid for Dial 100 Project
The assessee had already paid Rs. 1,19,05,483/- towards the service tax for the Dial 100 Project, which was appropriated by the Commissioner. The amount paid exceeded the liability by Rs. 8,188/-.

Issue 4: Interest Liability on Service Tax Amount
Interest on the confirmed service tax amount was demanded u/s 75 of the Finance Act. The amount of Rs. 46,04,563/- already paid by the assessee towards interest was appropriated.

Issue 5: Appropriation of Interest Paid
The Commissioner ordered the appropriation of Rs. 46,04,563/- paid by the assessee towards interest liability.

Issue 6: Imposition of Penalty u/s 78 of the Finance Act
A penalty of Rs. 81,19,495/- was imposed u/s 78 for the period April 2013 to March 2016. However, considering the bonafide belief of the assessee regarding the exemption, the Tribunal set aside the penalty.

Issue 7: Imposition of Penalties u/s 76 & 77 of the Finance Act
A penalty of Rs. 10,000/- was imposed u/s 77. The Tribunal did not find any further penalties warranted under Section 76.

Issue 8: Liability of the Director for Penalty u/s 78A of the Finance Act
The proposal to impose a penalty on Mr. K. Krishnam Raju, Director, was dropped by the Commissioner.

Conclusion:
The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal, setting aside the extended period of limitation and the penalty u/s 78. The assessee was entitled to consequential benefits in accordance with the law. The miscellaneous applications for additional evidence were also disposed of.

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