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2024 (7) TMI 551 - AT - Service TaxExemption from service tax - Services provided to International Organisation - Services rendered at J K by the noticee in accordance to the Place of Provision of Service Rules, 2012 - Services provided to SEZ - Extended period of limitation - penalties. Services provided to International Organisation - HELD THAT - There is no connection between exemption provided to United Nations and International Organizations as both are independent from each other. Further, the reference to The United Nations (Privileges and Immunities) Act, 1947 in the definition of Specified International Organisations is for limited purpose and has nothing to do with exemption provided to United Nations. To avail exemption under the Notification No. 25/2012-ST dated 20.06.2012, one has to be either United Nations or a notified International Organization - it is noted that the Mega Exemption Notification No. 25/2012-ST provides exemption to United Nations and there is no condition in this notification that any organizations/agency attached or affiliated to the United Nations also requires to be notified by Central Govt. under Section 3 of the United Nations (Privileges and Immunities) Act, 1947 - the exemption to United Nations is general in nature and services provided to UNDP, UNICEF, UN Women, UN AIDS, UNODC, UNOPS is available on the basis of mega exemption Notification No. 25/2012-ST dated 20.06.2012 itself. The demand in this regard is accordingly is liable to be set aside. Services rendered at J K by the noticee in accordance to the Place of Provision of Service Rules, 2012 - HELD THAT - It is noted that though the appellant has claimed the exemption, but no documentary evidence was provided by them before the adjudicating authority to corroborate their submissions. It is a fact that the levy of service tax extended to the whole of India except the State of Jammu Kashmir. However, this would be a question of fact to establish that the services were indeed provided in the non-taxable territory. Consequently, it would be appropriate that this issue be remanded to the adjudicating authority, giving opportunity to the appellant-respondent to submit corroborative evidence before the adjudicating authority in order to claim the exemption. Services provided to SEZ - HELD THAT - To avail the ab initio exemption, certain procedure was laid down, wherein the SEZ unit or Developer had to give a copy of the authorisation to the service provider for claiming the exemption. Therefore, as the adjudicating authority has held that no such evidence was submitted but as per assessee document are available and for this issue matter be remanded to the adjudicating authority with the directions to decide this particular issue afresh after giving opportunity to the appellant-respondent to submit corroborative evidence before the adjudicating authority, in order to claim the exemption - the services provided to the three educational institutions by the appellant-respondent during 2014-15 is exempted under Mega exemption itself. Accordingly, the demand in this aspect is set aside. Extended period of limitation - penalty u/s 77 78 of the Finance Act, 1994 - HELD THAT - The appellant respondent by filing their ST-3 returns had mentioned the amount received by them in the column meant for exempted services which was not as per the law as the services provided by them were taxable. Self-assessment regime placed the onus to correctly assess their service tax liability on the appellant respondent which was not fulfilled. Therefore, the penalty under section 78 was imperative. Similarly, as the appellant respondent had misdeclared the amount of taxable services, hence penalty under section 77 was leviable - On going through the show-cause notice, it is found that except for stating that the show-cause notice has been issued only after conduct of audit and that the appellants have suppressed the material facts, no evidence has been put forth to show that there has been a positive act of suppression on the part of the appellant-respondent to evade payment of duty - this Tribunal has been consistent in holding that extended period cannot be invoked unless a positive act on the part of the appellant is evidenced showing the intent to evade payment of duty - the impugned order upheld in respect of dropping of penalties under sections 77 78 of the Finance Act, 1994. The service tax demand in respect of services provided to UN agencies and educational institutions set aside - As regards the demand in respect of services provided in the State of Jammu Kashmir and units in SEZ, the same is allowed by way of remand with direction to adjudicating authority below for providing an opportunity to the appellant-respondent to submit all documentary evidence to substantiate their claim to the exemption. The interest and penalties will be subject to recalculation, based on the demand confirmed, if any.
Issues Involved:
1. Exemption of services provided to United Nations Organizations. 2. Exemption of services provided to Educational Institutes. 3. Services rendered in the State of Jammu and Kashmir. 4. Services provided to SEZ units. 5. Penalties under Sections 77 and 78 of the Finance Act, 1994. Issue-wise Detailed Analysis: 1. Exemption of Services Provided to United Nations Organizations: The appellant contended that services rendered to United Nations Organizations like UNDP, UNICEF, UN Women, UN AIDS, UNODC, and UNOPS are exempt from service tax under Notification No. 16/2002-ST dated 02.08.2002 and Notification No. 25/2012-ST dated 20.06.2012. The Tribunal examined the relevant notifications and concluded that the exemption applies to services provided to the United Nations and its representative agencies. The Tribunal referenced the decision in M/s Ballset Entertainment Pvt Ltd vs CST Delhi, which supported the exemption claim. Consequently, the demand of Rs. 1,02,11,729/- for services provided to these UN agencies was set aside. 2. Exemption of Services Provided to Educational Institutes: The appellant argued that the Cleaning and Housekeeping services provided to Educational Institutes, including IIT Patna, AIIMS Patna, and The Heritage School, Gurugram, are exempt under clause (9) of Exemption Notification No. 25/2012-ST dated 20.06.2012. The Tribunal agreed, citing the relevant exemption clause in the mega exemption notification. Therefore, the demand related to these services was set aside. 3. Services Rendered in the State of Jammu and Kashmir: The appellant claimed exemption for services provided in Jammu and Kashmir, asserting that service tax provisions do not apply to this state as per Section 64 of the Finance Act, 1994. However, the Tribunal noted the lack of documentary evidence provided by the appellant to support this claim. The issue was remanded to the adjudicating authority to allow the appellant to submit corroborative evidence to substantiate their exemption claim. 4. Services Provided to SEZ Units: The appellant contended that services provided to SEZ units are exempt under Notification No. 17/2011-ST dated 01.03.2011 and Notification No. 40/2012-ST dated 20.06.2012. The Tribunal observed that the appellant failed to furnish necessary documents to claim the exemption. The matter was remanded to the adjudicating authority to provide the appellant an opportunity to submit the required evidence to support their exemption claim. 5. Penalties under Sections 77 and 78 of the Finance Act, 1994: The adjudicating authority had refrained from imposing penalties under Sections 77 and 78 of the Finance Act, 1994, citing the appellant's regular filing of ST-3 returns and lack of evidence of malafide intent. The Tribunal upheld this decision, referencing several case laws that established the necessity of a positive act of suppression to invoke extended periods and penalties. The Tribunal found no evidence of such intent by the appellant and thus upheld the dropping of penalties. Conclusion: The Tribunal dismissed the appeal filed by the Revenue department. It set aside the service tax demand related to services provided to UN agencies and educational institutions. The issues regarding services provided in Jammu and Kashmir and to SEZ units were remanded to the adjudicating authority for further examination with directions to allow the appellant to submit necessary evidence. The penalties under Sections 77 and 78 were upheld as dropped by the adjudicating authority. The appellant's appeal was partly allowed in respect of the two issues and allowed by remand for the remaining two issues.
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