2024 (5) TMI 196 - AT - Service Tax

Invocation of extended period of limitation - activities of the appellant have been entered in their books of accounts and they have been filing their ST-3 returns regularly - Failure to discharge the service tax liability correctly - income earned for the services such as customer fee income, share application fee income, share application fee income for society, tender form fee income, transfer fee income, visit fee income etc. HELD THAT - It can be seen that the provisions of section 73(1) provides that if the service tax has not been levied or paid or has been short paid or short levied for the reason of fraud, collusion or willful mis-statement or suppression of facts or contravention of any of the provision of this chapter or the rules with an intend to evade payment of service tax the show cause can be issued within a period of five years - Since, the allegations of fraud, collusion or willful mis-statement or suppression etc. has not been proved by the department. It is found that invoking the extended time proviso under section 73(1) of the Finance Act, 1994 is legally not sustainable. The demand of service tax has been made from April 2007 to March 2012, while the show cause notice has been issued on 1st December, 2015 and therefore it is clear that entire period of the demand is barred by period of limitation and period from April 2007 to January 2010 is even beyond the intended time limit of five years. At the same time the department has not been able to adduce any evidence which can support the extended time proviso for demanding service tax. This Tribunal in case of INTERCONTINENTAL POLYMER PVT LTD VERSUS C.C.E. S.T. -DAMAN 2023 (6) TMI 453 - CESTAT AHMEDABAD held that ' in the peculiar facts as noted above there is no suppression of fact or mala-fide intention on part of the appellant, therefore, the invocation of extended period is illegal and incorrect.'. The demand for the period April 2007 to March 2012 raised by the show cause notice dated December 1, 2015 is clearly barred by period of limitation and therefore without going into merit of the matter, it is held that the impugned show cause notice is barred by period of limitation - the impugned order is set aside - appeal allowed.

Summary

Issues Involved:

1. Invocation of Extended Time Proviso u/s 73(1) of the Finance Act, 1994
2. Demand of Service Tax on Various Income Heads

Summary:

1. Invocation of Extended Time Proviso u/s 73(1) of the Finance Act, 1994:

The appellant objected to the invocation of the extended time proviso u/s 73(1) of the Finance Act, 1994, arguing that they regularly filed ST-3 returns and that there was no fraud, collusion, willful mis-statement, or suppression of facts. The Tribunal found that the department had not provided evidence of any such activities by the appellant. It was noted that the appellant, a reputable co-operative society, would not intentionally evade service tax. The Tribunal referenced several decisions, including M/s. Intercontinental Polymer Pvt Ltd and M/s. GD Goenka Pvt Ltd, to support the view that the extended time proviso was not applicable. Consequently, the demand for service tax for the period April 2007 to March 2012 was deemed barred by the period of limitation, and the show cause notice issued on December 1, 2015, was legally unsustainable.

2. Demand of Service Tax on Various Income Heads:

The appellant provided explanations for various income heads questioned by the department:

(i) Customer Fees Income: The appellant argued that the fees were for application forms for prospective agents to start selling milk and were not for services rendered to customers.

(ii) Share Application Fee Income (Nominal) & Share Application Fee Income (Society): The fees were for application forms for membership in the co-operative society, not for any service provision.

(iii) Tender Form Fees and Transfer Fees Income: The fees were for tender forms and transfer fees for motor vehicle contracts, not for service provision.

(iv) Visit Fees Income: The fees were for veterinary visits to ensure animal health, which is exempt under Notification No. 25/2012-ST.

(v) Notice Pay Income: The fees were for employees failing to provide notice before job discontinuation, not for service provision.

The Tribunal, after considering the appellant's explanations and the department's reiteration of the impugned order, found that the department had not proven any fraudulent activities or suppression of facts by the appellant. Therefore, the demand for service tax was not justified.

Conclusion:

The Tribunal held that the demand for the period April 2007 to March 2012 was barred by the period of limitation and that the impugned order was legally unsustainable. The appeal was allowed, and the impugned order was set aside.

(Dictated and pronounced in the open Court on 30.04.2024)