2024 (5) TMI 71 - AT - Service Tax

Short payment of service tax - rental income received from educational institution during 2014-15 - non-submission of material proof like invoices, bills etc. - assessee could not give details of exemption claimed and the fact that they were not mentioned in the returns filed nor any invoice/documents were provided to the audit team - N/N. 25/2012-ST was substituted by N/N. 06/2014-ST with effect from 11.07.2014 - suppression of facts or not - Extended period of Limitation - penalty u/s 78 of FA - HELD THAT - On going through notification it is clear that the exemptions were not available during this period even though it was otherwise available prior to the period and even after the subsequent period. It is also found that the show cause notice has not given clear break up of various incomes which were received as income arising out of services provided by the appellant nor they have given any specific applicable rate of duty or exemption under which they were either liable to service tax or otherwise exempted. The mere perusal of the show cause notice shows that it has not brought categorically the grounds on which the demand was proposed. Further, it is an admitted fact that they were not liable to service tax prior to this demand period or subsequent to this demand in terms of extent notifications. Under this condition, there could have been a bonafide belief that they were not liable to pay service tax. Further, merely because they were raising the invoices in the same old fashion it does not make them defaulter who deliberately and intentionally, despite knowing the fact that they were liable to pay service tax, chose not to pay service tax. No such details or grounds to the contrary have been brought in the show cause notice for invoking proviso to Section 73. Proviso to Section 73 provides that the demand can be raised even beyond the normal period of 30 months, but within 5 years, where the service tax has not been levied or paid etc., by fraud, willful misstatement, suppression of facts, contravention of any provision of the chapter or the rules made therein with intent to evade payment of service tax - In the facts of the case, proviso to Section 73 is not applicable and therefore extended period cannot be invoked for demanding service tax on the rental income during the material period in 2014-15 as the show cause notice has clearly been issued after 30 months from the given date. Therefore, the demand is clearly time barred. Since the demand is already time barred and no deliberate suppression etc., is invokable in the facts of the case, the penalty is also not leviable under Section 78. The appeal is allowed.

Summary

Issues involved:
The issues involved in the judgment are related to service tax liability on various services provided by the appellant, discrepancy in revenue declared in Service Tax returns and Profit & Loss account, demand on account of rental income, applicability of exemptions, extended period of limitation for demand, and penalty under Section 78.

Service Tax Liability on Various Services:
The Department found a difference between total revenue declared in Service Tax returns and figures in Profit & Loss account. The Department calculated a short payment of service tax, leading to a demand of Rs. 1,14,38,874. Despite explanations provided by the appellants, the Department did not accept them due to lack of material proof like invoices and bills. The Original Authority confirmed the entire amount demanded, primarily due to non-acceptance of the explanations.

Exemption for Rental Income:
The Commissioner (Appeals) examined the reasons for the difference in income and concluded that certain incomes were on account of payment of taxes like Service Tax, VAT, and Luxury Tax. He set aside the demand on account of income of Rs. 5,87,30,219 out of Rs. 8,11,36,070. Regarding rental income to educational institutions, the Commissioner found that the exemption was withdrawn during the material time, and ordered a re-computation of service tax liability for that period.

Extended Period of Limitation and Penalty under Section 78:
The appellant argued against the invocation of the extended period of limitation for demanding service tax on rental income, citing lack of sufficient grounds in the show cause notice. The appellant contended that there was no deliberate intention to evade service tax payment. The Tribunal found that the demand was time-barred as the proviso to Section 73 was not applicable, and hence, the penalty under Section 78 was not leviable.

Conclusion:
The Tribunal allowed the appeal, stating that the demand was time-barred, and no deliberate suppression was evident. The penalty under Section 78 was deemed not leviable. The judgment was pronounced on 30.04.2024.