2024 (11) TMI 1348 - AT - Service Tax

Receipts pertain to export of services or not? - Demand by deviating the basis issue as to whether the receipts pertain to export of services or not - HELD THAT - Original Authority accepted the activity undertaken by the appellant as export of service and dropped the proceedings by considering all the evidences on record. As find that on appeal filed by the Revenue, Commissioner (Appeals) without considering the reasons on the basis of which the Original Authority has dropped the proceedings, proceeded to confirm the demand on the basis of irrelevant discrepancies which was not the issue for determination especially when the Original Authority has accepted the receipts to be export proceeds on the basis of FIRC which is a legal document for acceptance of proof of export of service. The entire proceedings against the appellant were initiated on the basis of gross receipts as shown in the Income Tax Returns and Form 26-AS for the year 2014-15. The entire demand in the present case is barred by limitation because the Show Cause Notice was issued on 29.09.2020 but the same was served on 18.02.2022 whereas the period of demand is October 2014 to March 2015; and Commissioner (Appeals) has not given any finding on the limitation. The extended period of limitation can only be invoked when the department establishes by cogent evidence that there is a suppression of material facts at the appellant s end with intent to evade payment of duty, whereas in the present case there is no suppression because the Show Cause Notice is based upon the documents including bank account and Income Tax Returns.

Summary

Issues:
Appeal against the order of the Commissioner (Appeals) allowing the department's appeal and setting aside the Order-in-Original on the grounds of export of service, demand confirmation, limitation, and suppression of facts.

Analysis:
1. The appellant, engaged in Information & Technology services, faced proceedings based on gross receipts from Income Tax Returns and Form 26-AS for 2014-15. The Original Authority deemed the activity as 'export of service,' dropping the proceedings. However, the Revenue appealed, leading to the Commissioner (Appeals) setting aside the Order-in-Original.

2. The appellant's counsel argued that the impugned order lacked legal sustainability, as it deviated from the core issue of service export receipts. The Commissioner (Appeals) allegedly confirmed the demand based on irrelevant discrepancies, ignoring the acceptance of receipts as export proceeds by the Original Authority through FIRC.

3. The appellant contended that the demand confirmation was unjustified due to the Commissioner (Appeals) invoking the extended limitation period. The appellant cited various legal precedents to support the limitation argument, emphasizing that the demand period fell outside the normal limitation period.

4. The Authorized Representative for the Revenue defended the findings of the impugned order, leading to a detailed analysis by the Member (Judicial). The Member noted that the Original Authority had correctly identified the appellant's activity as 'export of service,' supported by evidence on record.

5. The Member found fault with the Commissioner (Appeals) for confirming the demand without proper consideration of the Original Authority's reasoning. The Member highlighted the lack of findings on limitation by the Commissioner (Appeals), emphasizing the importance of establishing suppression for invoking the extended limitation period.

6. Ultimately, the Member concluded that the impugned order was legally unsustainable. By setting aside the order and allowing the appellant's appeal, the Member determined that the demand confirmation and the invocation of the extended limitation period were unjustified, given the absence of suppression and the acceptance of export proceeds by the Original Authority.