2024 (5) TMI 462 - AT - Service Tax

Exemption from Service Tax - rendered services to BRO by way of construction of roads and bridges for the use of public - exemption from payment of service tax in terms of Sl. No. 13(a) of Exemption Notification No. 25/2012 ST dated 20-06-2012 - suppression of facts or not - extended period of limitation - HELD THAT - During the period October 2014 to June 2017, the appellant has rendered services to BRO by way of construction of roads and bridges for the use of public. It is found that these services rendered by the appellant are exempted from payment of service tax in terms of Sl. No. 13(a) of Exemption Notification No. 25/2012 ST dated 20-06-2012. The appellant also carried out these works contracts as a sub-contractor for construction of roads, under an agreement on behalf of the said Contractors NECL and BIPL. These services rendered by the appellant as a sub-contractor are exempted from payment of service tax in terms of Sl. No. 29(h) Notification No. 25 read with Sl. No. 13(a) of Exemption Notification No. 25. The department has sought copies of Income Tax returns, balance sheet, bank statement, Form 26AS, work order/contract/agreement and service tax returns from the appellant vide letter dated 12.08.2016. The Appellant vide its letter dated 14-12-2016 duly submitted all the details. No proceedings were initiated thereafter. Thus, the Department was completely aware of the activities undertaken by the Appellant in 2016 itself and in spite thereof no efforts were taken by the revenue to issue show cause notice in time. It is also observed that the entire demand is based on Form 26AS received from the Income Tax Department and the revenue could have sought the same information within the normal period of limitation. Accordingly, the allegation of suppression is not established in this case and hence the entire demand confirmed in the impugned order is barred by limitation. The demand of service tax against the appellant is not sustainable on merits as well as on limitation - Appeal allowed.

Summary

Issues involved: Service tax demand on services rendered to BRO, invocation of extended period of limitation, necessity of registration and imposition of penalty.

Summary:

1. Service Tax Demand on Services Rendered to BRO:
The appeal was filed against the Order-in-Original confirming a Service Tax demand of Rs. 6,18,49,097/- along with interest and penalty. The Appellant contended that the services rendered to BRO were exempted from service tax under relevant notifications. The appellant acted as a sub-contractor for construction of roads, which was also exempted from service tax. The appellant argued that the demand was based solely on information from Form 26AS and did not reflect the actual taxable value of services provided. The Tribunal observed that the services rendered were indeed exempted from service tax, and hence, the demand was not sustainable.

2. Invocation of Extended Period of Limitation:
The Appellant argued that the extended period of limitation cannot be invoked as there was no suppression of facts. The Department had initiated an investigation earlier and was aware of the activities undertaken by the Appellant. Since the demand was based on Form 26AS information, the Tribunal held that there was no suppression and the demand was barred by limitation.

3. Necessity of Registration and Imposition of Penalty:
The Appellant contended that since there was no requirement to pay service tax, registration was unnecessary, and hence, late fees and penalties should not be imposed. The Tribunal agreed with the Appellant's submissions and set aside the late fee and penalty imposed in the impugned order.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal filed by the Appellant as the demand of service tax was deemed unsustainable both on merits and limitation grounds.