2006 (11) TMI 17 - AT - Service Tax

Valuation(Service tax)- Alleged that assessee fail to file return- It is considering sufficient for invocation of extended period by the adjudicating authority

Summary

Issues:
1. Whether the demands for service tax based on IT returns are justified.
2. Whether the demands are barred by time under Section 73 of the Finance Act 2001.

Analysis:
1. The appeals involved a common question of law and facts, leading to their joint consideration. The show cause notice relied on IT returns to levy service tax, indicating amounts due from the parties for specific years. The appellants argued against the invocation of a larger period, citing lack of suppression, misstatement, or fraud. They contended that since they registered in 1997 and the notice was issued in 2001, the demands were time-barred. Additionally, they referenced a precedent where service tax could not be confirmed based solely on amounts shown due in IT returns, suggesting a recalculation excluding such amounts by the Original Authority.

2. The JDR maintained that non-filing of returns was adequate to trigger the larger period under Sections 68 and 70 of the Finance Act 1994. He asserted that the appellants collected service tax but failed to remit it to the government, justifying the confirmation of demands. However, upon reviewing the Orders-in-Original, it became evident that the duty was demanded after scrutinizing various records, including IT returns. The Tribunal's precedent clarified that service tax should be levied on amounts already received, not those indicated in IT returns. Consequently, the demands needed to be reevaluated, excluding dues shown in the IT returns.

3. The judgment addressed the time bar issue under Section 73 of the Finance Act 2001, which lacked a specific time limit for recovery of dues. It allowed demands to be raised within five years if certain conditions were met, such as the assessee omitting to make a return or disclose material facts. In this context, the demands were deemed not time-barred. The matter was remanded to the Original Authority for a detailed reassessment of the duty liability concerning received amounts, with the appellants granted a hearing and a mandate to issue a speaking order within four months. Ultimately, the appeals were allowed for remand to the Original Authority for further proceedings.