2024 (7) TMI 185 - AT - Service Tax

Non-payment of service tax - services of construction of Girls College for M/s Amar Nath Trust etc. - construction of buildings in relation to education premises are exempted vide Sl No 9 of the N/N. 25/2012-ST dated 20.06.2012 or not - Demand made in respect of the services provided to M/s Madhucon Projects in relation to construction of toll Plaza at Jaipur Highway - Computation of the service tax payable in respect of the services provided by the appellant to M/s Ginni Filament - time limitation - Cum tax benefit - interest - penalty - Late filing fees. Demand made in respect of services of construction of Girls College for M/s Amar Nath Trust etc. - HELD THAT - The services provided by the appellant are under the category of work contract services and are not in nature of the services specified under the said entry. There are no merits in the submissions made by the appellant in this regard. Appellant has claimed exemption under Sl No 13 of the said notification before the original authority which has been rejected only in specific cases and appellant has not challenged the rejection at the time of argument of the appeal. The demand made in respect of the services provided by the appellant to the said trust have been held to be exempted where the services were for charitable causes in terms of the said notification under that entry. There are no merits in the submissions made by the appellant in this respect. Demand made in respect of the services provided to M/s Madhucon Projects in relation to construction of toll Plaza at Jaipur Highway - HELD THAT - It is evident that the demand has been confirmed for the reasn that appellant were unable to substantiate their claim that they were providing the services to M/s Madhucon Project for construction of Toll Plaza by way of a proper certificate. Impugned order records the reason for rejection of the said certificate. The said certificate which was produced have not be produced before us in this appeal. Instead a copy of work order dated 18.10.2010 given by M/s Madhucon Projects Limited to appellant has been produced. This work order is in respect of Construction of Toll Booth at Bharatpur Jaipu Highway including all finishing size 1.5 X 3.00 m . This work order do not specify any thing in respect of road construction contract between NHAI and M/s Madhucon Projects - In absence of any evidence to the contrary there are no substance in the challenge made by the appellant to the findings recorded in the impugned order. Computation of the service tax payable in respect of the services provided by the appellant to M/s Ginni Filament - HELD THAT - There are no merits in the appellant challenge to the computation of the tax liability. Time limitation - HELD THAT - Impugned order clearly records the reason for invoking the extended period, and there are no challenge in the appeal or during the course of arguments here. Penalties - HELD THAT - The penalties imposed upon the appellant under Section 78 of the Finance Act, 1994 are justified in view of the observation made by the Hon ble Supreme Court in case of Rajasthan Spinning and Weaving Mills Ltd 2009 (5) TMI 15 - SUPREME COURT - Penalties imposed under Section 77 (1) (a), 77 (1) (b) and 77 (2) are also justified for the reasons of contraventions of the Act and Rules made thereunder. Appellant has contravened the provisions by not taking registration, not filling the returns and not paying the tax by the due date. The penalties in such case need to be upheld. Interest - HELD THAT - As the demand for tax is upheld, the demand of interest under Section 75 is also consequential and upheld. Late filing fees - HELD THAT - As the appellant has not filed the returns by the due date, late filing fees levied in terms of Rule 7C of the Service Tax Rules, 1994 is also upheld. There are no merits in the appeal - appeal dismissed.

Issues Involved:
1. Demand of Service Tax
2. Appropriation of Service Tax
3. Imposition of Penalty under Section 78
4. Demand of Late Fee under Rule 7C
5. Imposition of Penalty under Section 77(1)(a), 77(1)(b), and 77(2)
6. Exemption Claims
7. Time-Barred Demand
8. Interest and Penalty Imposition

Detailed Analysis:

1. Demand of Service Tax:
The Tribunal confirmed the demand of Service Tax amounting to Rs 36,44,549 against the appellant under Section 73(1) of the Finance Act, 1994, along with applicable interest under Section 75 of the Act. The appellant provided services categorized as "Work Contract Services" and "Legal Consultancy Services" but failed to pay service tax on services provided to various entities, including M/s Amar Nath Ashram Trust and M/s Ginni Filaments Ltd.

2. Appropriation of Service Tax:
The Tribunal ordered the appropriation of Rs 62,507 deposited by the noticee against the confirmed demand of service tax. The appellant did not contest this appropriation.

3. Imposition of Penalty under Section 78:
A penalty equivalent to the service tax amounting to Rs 36,44,549 was imposed under Section 78 of the Finance Act, 1994. The Tribunal upheld this penalty, stating that the appellant knowingly and willfully suppressed material facts to evade tax, thereby contravening various provisions of the Act and Rules.

4. Demand of Late Fee under Rule 7C:
The Tribunal confirmed the demand of a late fee amounting to Rs 2,20,000 under Rule 7C of the Service Tax Rules, 1994, for non-filing of ST-3 returns. The appellant failed to file the required periodical returns in time, making them liable for this penalty.

5. Imposition of Penalty under Section 77(1)(a), 77(1)(b), and 77(2):
A penalty of Rs 20,000 was imposed under Section 77(1)(a), 77(1)(b), and 77(2) for contravening various provisions of the Act and Rules. The Tribunal upheld these penalties, citing the appellant's failure to register, file returns, and pay the due tax.

6. Exemption Claims:
The appellant claimed exemptions for services provided to M/s Amar Nath Ashram Trust and M/s Ginni Filaments Ltd. under Notification No. 25/2012-ST. The Tribunal rejected these claims, stating that the services provided did not fall under the specified exempt categories. The services were categorized as "work contract services," not auxiliary educational services or renting of immovable property.

7. Time-Barred Demand:
The appellant argued that the demand was time-barred. The Tribunal rejected this argument, stating that the appellant did not oppose the imposition of the extended period during the investigation. The Tribunal found evidence of willful suppression of facts, justifying the invocation of the extended period of limitation.

8. Interest and Penalty Imposition:
The Tribunal upheld the demand for interest under Section 75 as consequential to the upheld tax demand. The penalties imposed under Section 77 and 78 were also upheld, citing the appellant's failure to comply with statutory obligations and the absence of mens rea as a necessary element for these civil penalties.

Conclusion:
The Tribunal dismissed the appeal, confirming the service tax demand, appropriation, penalties, and late fees. The appellant's claims for exemptions and arguments against the time-barred demand were rejected. The decision emphasized the appellant's non-compliance with statutory obligations and willful suppression of facts, justifying the penalties and extended period of limitation.

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