2024 (8) TMI 1103 - AT - Service Tax

Extended period of limitation - levy of service tax - GTA services. Time Limitation - appellants submits that the issue has arisen on the basis of 26AS statement of the appellants supplied by the Income Tax Department and therefore, extended period cannot be invoked - HELD THAT - It is found that Revenue has issued the Show Cause Notice on the strength of the data supplied by the Income Tax Department; Revenue claims that they have given three opportunities to the appellants by way of letters/ mails/ summonses and as the appellant did not supply data, they have taken recourse to best judgment method. The appellants claim that the summonses/ letters sent by the Department were not received by the appellant as the same were sent to their old address - The Department with all the might at their disposal could have verified the address of the appellants and the records thereof. Learned Authorized Representative submits that a huge demand of Rs.3.5 crore cannot be assessed or finalized on the basis of sample invoices - the demand is huge, the Department should have undertaken appropriate investigation into the matter. The Show Cause Notice does not bring about any positive act on the part of the appellants with intent to evade payment of duty so as to allege suppression, mis-declaration etc. in order to invoke extended period - Tribunal has been consistently holding that extended period cannot be invoked when the case is made on the basis of 26AS statement, more so, when no ingredients for invocation of extended period are present in the case. Therefore, we are of the considered opinion that no case has been made for invocation of extended period. In the instant case, the appellant is a GTA service provider wherein the service recipient is liable to pay service tax on Reverse Charge Mechanism. The Department failed to adduce any evidence to the effect that the appellants have rendered taxable service to the category of persons who do not fall under the category liable to pay service tax on RCM basis and this appropriate tax requires to be paid by the appellants themselves. In the absence of the same, the benefit of doubt has to be given to the appellants. It is not proper on the part of the Department to make allegations and show the failure on the part of the appellants to provide records as evidence. It is for the Department who are alleging to adduce evidence. The extended period cannot be invoked and thus, the appeal succeeds on limitation - appeal is allowed on limitation.

Issues Involved:
1. Service Tax Liability on GTA Services
2. Invocation of Extended Period for Demand
3. Validity of Best Judgment Assessment
4. Calculation of Service Tax Demand
5. Penalties Imposed under Various Sections

Issue-wise Detailed Analysis:

1. Service Tax Liability on GTA Services:
The appellants, M/s New Prakash Roadways, are engaged in providing GTA services and availing Notification No.30/2012. The Department alleged that the appellants received considerable income from taxable services, intentionally suppressed facts, did not pay service tax, and did not file ST-3 Returns. The appellants argued that as a GTA service provider, they are liable to pay service tax under the Reverse Charge Mechanism (RCM) as per Notification No.30/2012-ST. They contended that the consignment notes issued contained all relevant particulars, and even if not issued, they were covered by Entry No.22 under Notification No.25/2012. Additionally, services provided to Nepal and Bhutan were outside the taxable territory under Rule 6A (Export of Services) Rules, 1994.

2. Invocation of Extended Period for Demand:
The appellants argued that the entire Show Cause Notice is barred by limitation as it was based on the 26AS statement from the Income Tax Department. They claimed that extended period cannot be invoked merely because registration was not obtained, and Returns were not filed. The Department countered that the appellants did not register themselves, file Returns, or respond to letters/summonses, justifying the invocation of the extended period. However, the Tribunal found that the Show Cause Notice did not establish any positive act of suppression or mis-declaration by the appellants to warrant the extended period.

3. Validity of Best Judgment Assessment:
The Department used the best judgment method under Section 72 of the Finance Act, 1994, due to the lack of proper data from the appellants. The appellants contended that the demand based on Income Tax Returns and 26AS without examining their records or identifying service recipients was not legally sustainable. The Tribunal noted that the Department should have conducted a thorough investigation rather than relying on best judgment, especially given the significant demand amount.

4. Calculation of Service Tax Demand:
The appellants argued that the Department wrongly calculated the demand on the higher side by using a uniform tax rate instead of the actual rates for each period from 2015 to 2017. They claimed the actual tax payable was Rs.2,80,04,204/-, not Rs.3,81,63,938/-. The Department alleged that the appellants collected service tax but did not pay it. However, the appellants provided invoices and a Chartered Accountant's certificate indicating they did not recover the tax from service recipients. The Tribunal found no corroborative evidence from the Department to support their claim.

5. Penalties Imposed under Various Sections:
The impugned order imposed various penalties: under Section 75, Rs.80,000/- under Section 70, Rs.10,000/- under Section 77, and Rs.38,16,394/- under Section 78. The appellants argued that no penalties should be imposed as there was no suppression or mis-declaration on their part. The Tribunal, agreeing with the appellants, found that the penalties were not sustainable as the tax demand itself was not justified.

Conclusion:
The Tribunal concluded that the appeal succeeds on the ground of limitation, as the extended period could not be invoked based on the 26AS statement without proper investigation. The Department's reliance on best judgment assessment without thorough investigation was not permissible. Therefore, the appeal was allowed on the limitation issue, and the merits of the case were not further examined.

Order:
The appeal is allowed on limitation.

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