2009 (10) TMI 395 - AT - Service Tax

Outdoor catering Services valuation revenue neutral exercise - The Appellant is engaged in activities related to construction of roads and water pipelines throughout India. They also act as goods transport agency. In this case (Tri-Ahmd.) - held that - extended period could not have been invoked as the appellant have made payment of service tax with interest thus the penalties imposed under various section are liable to be set aside. When the appellant can take the credit and utilize it further for the payment of tax, naturally he would not get any benefit by not paying such a tax and attracting penal provisions of the law. - extended period could not have been invoked in this case.

Summary

Issues:
1. Liability of service tax on the appellant.
2. Invocation of extended period for issuing show cause notice.
3. Imposition of penalties under Sections 78 and 76 of the Finance Act, 1994.
4. Applicability of Section 80 of the Finance Act.

Analysis:

Liability of Service Tax:
The Appellate Tribunal confirmed a service tax demand of Rs.15,70,882/- on the appellant, engaged in construction activities and acting as a goods transport agency. The liability arose as per Notification No. 35/2004-ST and Rule 2(d)(v) of Service Tax Rules, 1994, shifting the burden of paying service tax to the appellant. The appellant contended that the show cause notice was issued beyond the one-year period and that they were eligible for service tax credit for construction services provided. The Tribunal noted the liability but considered the appellant's argument regarding the extended period.

Invocation of Extended Period:
The appellant argued that the show cause notice was issued beyond the statutory period of one year, invoking the extended period. The Tribunal considered the intention of the appellant, emphasizing that once service tax and interest were paid, no penalty could be imposed. Citing relevant case laws, the Tribunal held that the extended period could not have been invoked in this case, as there was no intention to evade tax. The Tribunal also highlighted that the liability to tax was not disputed, and the issue should be considered concluded after the appellant paid the service tax with interest.

Imposition of Penalties:
Penalties under Sections 78 and 76 of the Finance Act, 1994 were imposed on the appellant. However, the Tribunal set aside these penalties, considering that the extended period could not have been invoked, and there was no suppression or misdeclaration of tax. The Tribunal emphasized that once the service tax with interest was paid, no further action was required, leading to the conclusion that no penalty could be imposed.

Applicability of Section 80 of the Finance Act:
Despite the conclusion that no penalty could have been imposed, the Tribunal invoked the provisions of Section 80 of the Finance Act, considering it a fit case for such action. Consequently, the penalties imposed under various sections of the Finance Act were set aside, and the appeal was allowed, providing relief to the appellant.

This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal, the arguments presented by the parties, and the legal reasoning behind the decision rendered in this case.