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2024 (5) TMI 890 - AT - Service TaxTaxability - appellant has provided taxable services against consideration whereupon TDS has also been deducted by the service receivers - exemption under Mega Exemption N/N. 25/2012- ST dated 20.06.2012 - suppression of facts or not - extended period of limitation - penalty - HELD THAT - The work of Schedule-A are in the nature of original works whereas those under Schedule-B are the works related to alterations. It is the original work which is exempted vide Entry No. 14(a) of Notification No. 25/2012-ST dated 20.06.2012. Hence, the demand with respect to the work orders mentioned in Schedule-A has rightly been dropped. With respect to Schedule-B work those are not the original work, the exemption from tax under above said Entry No. 14(a) is not available. However, it is not in dispute that the services with respect to Schedule-B work orders are provided to Indian Railways - thus irrespective the work of Schedule-B was not of original nature but was covered under the aforesaid exemption clause. Resultantly, it stands clear that the appellant had no tax liability even with respect to the service, the demand whereto has been confirmed in the order under challenge. Extended period of Limitation - suppression of facts or not - HELD THAT - Though the appellant was rendering a service in the nature of Works Contract Service but the activity being in the nature of original work that too being provided to the Railways. There remains no tax liability with the appellant even with respect to non-original work as being provided to the Indian Railways. The appellant was not liable to discharge any tax. Hence, not getting itself registered under Service Tax Department and non-filing of service tax return is wrongly held to be an act of suppression on part of the appellant - Otherwise also it is not the mere act of the suppression which entitles department to invoke the extended period while issuing show cause notice and to impose the penalty. The alleged act has to be proved to be a positive act done by the assessee that too with an intent to evade tax - The department is therefore held to have wrongly invoked the extended period. Penalty - HELD THAT - Since there is no intent to evade the payment, no question arises of any penalty under Section 78. Since the appellant is held to have been rendering exempted services, question of any penalty under Section 77 is also absolutely redundant. Appeal allowed.
Issues Involved:
1. Taxability of services provided by the appellant. 2. Nature of work orders and their classification. 3. Allegations of suppression of facts and invocation of the extended period. 4. Imposition of penalties u/s 77 and 78 of the Finance Act, 1994. Summary: 1. Taxability of Services Provided by the Appellant: The appellant provided taxable services as defined u/s 65B(44) of the Finance Act, 1994, and received Rs.10,25,639/- u/s 194C of the Income Tax Act, 1961, during FY 2014-15. The department, based on third-party information from the Income Tax Department, issued a Show Cause Notice (SCN) proposing recovery of Rs.6,11,686/- as service tax, along with interest and penalties u/s 77 and 78 of the Finance Act, 1994. The original adjudicating authority confirmed a demand of Rs.4,05,430/- and imposed an equal penalty. On appeal, the confirmed amount was upheld except for Rs.9,344/-, and the penalty was reduced to Rs.3,96,086/-. 2. Nature of Work Orders and Their Classification: The appellant argued that the work orders were composite and involved original works, thus exempt from service tax. The adjudicating authority examined two work orders: - Work Order No. W/3/4 dated 25.05.2015: The authority categorized Schedule-A as original work and Schedule-B as alterations/modifications. - Work Order No. W/2/5 dated 18.02.2016: The authority considered it as a labour contract without supply of material, hence not covered under Works Contract Service. The Tribunal observed that Schedule-A involved original works and was exempt u/r 14(a) of Notification No. 25/2012-ST. Schedule-B, although not original work, was provided to Indian Railways and exempt u/r 12A(a) of the same notification. 3. Allegations of Suppression of Facts and Invocation of the Extended Period: The department alleged suppression of facts by the appellant for not disclosing taxable services. The Tribunal found that the appellant's services were exempt, and there was no intent to evade tax. Mere failure to declare does not amount to willful suppression, as held in Anand Nishikawa Company Limited Vs. CCE. Thus, the extended period was wrongly invoked, and the SCN was barred by time. 4. Imposition of Penalties u/s 77 and 78 of the Finance Act, 1994: Since the appellant was rendering exempted services, the penalties u/s 77 and 78 were deemed redundant. The Tribunal set aside the order under challenge and allowed the appeal. Conclusion: The Tribunal set aside the impugned order, holding that the appellant's services were exempt and there was no suppression of facts. The appeal was allowed, and the penalties were nullified. [Order pronounced in the open court on 17. 05. 2024]
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