2024 (11) TMI 402 - AT - Service Tax

Quantum of demand based on gross receipt - benefit of tax value - invocation of extended period for issuing show cause notice - imposition of penalty, applicability of section 80 of the Finance Act, 1994 - HELD THAT - There is no element of suppression or concealment on part of the appellant. Hence we hold that extended period of limitation is not invokable in the present case. The period in dispute is the year 2006 to 2012 and the Show Cause Notice has been issued on 23.04.2012. Hence it is only the period from 25.04.2011 to February 2012 which the normal period of limitation for serving SCN. The demand for rest of the prior period is therefore held barred by the period of limitation. It has already been observed that the appellant has already admitted his service tax liability and has deposited the amount demanded voluntarily. Hence we confirm the demand for the normal period and set aside the demand for the extended period. The order under challenge/ Order-in-Appeal is upheld vis- -vis normal period and rest is hereby set aside. Consequently, the appeal is partly allowed.

Summary

Issues:
Assessment of service tax liability based on gross receipts, calculation of demand on ledgers, invocation of extended period for issuing show cause notice, imposition of penalty, applicability of section 80 of the Finance Act, 1994, and determination of period of limitation.

Analysis:
The appellant, engaged in man power recruitment and supply agency services, was found to have paid service tax only on amounts received in the name of services provided, not on the value of services received without corresponding payments. A show cause notice was issued proposing recovery of service tax short paid during October 2006 to February 2012. The order in original confirmed the demand, which was partly allowed in the impugned order in appeal, reducing the liability to Rs. 46,58,132 from Rs. 51,80,982. The appellant challenged the quantum of demand on three grounds: calculation basis, tax value benefit, and invocation of extended period for the SCN.

The Commissioner (Appeals) upheld the confirmation of demand based on gross receipts in the balance sheet, noting lack of documentary evidence supporting the appellant's contentions. However, the benefit of tax value was extended as the appellant had not charged service tax on certain invoices, leading to a reduced confirmed amount. The issue of the SCN being barred by time was not addressed in the impugned order.

Regarding the penalty, the original adjudicating authority did not impose it, citing the appellant's bona fide belief in their tax liability and the contradictory findings related to the cum-tax benefit and section 80 of the Finance Act, 1994. The Tribunal found no suppression or concealment by the appellant, holding that the extended period of limitation was not applicable for the period before April 25, 2011. The demand for the extended period was set aside, confirming it only for the normal period.

In conclusion, the Tribunal upheld the Order-in-Appeal for the normal period and set aside the rest, partly allowing the appeal based on the findings related to the calculation of demand, tax value benefit, period of limitation, and imposition of penalty.