2012 (6) TMI 457 - AT - Service Tax

Extended period of limitation - assessee contended that SCN is time barred as earlier SCN dated 31/8/04 had been issued on the same ground for demand hence extended period of limitation cannot be invoked - Held that - When the activity of the appellant was fully known to the department and earlier a SCN dated 31/8/04 had been issued for demanding service tax for the period from 1/4/02 to 31/12/03, the department cannot accuse the appellant of suppression of fact for the subsequent period, even if they did not pay the service tax or filed the returns, as the department could have searched their premises and obtained the required information. Hence, for demand of non-paid service tax for the subsequent period from February 2004 to 31/3/05, the longer limitation period under proviso to Section 73 (1) would not be applicable. Since SCN for this period has been issued on 15/10/07, the same is time barred hence, demand is not sustainable on the ground of limitation - Decided in favor of assessee.

Summary

Issues:
Interpretation of service provided under contract with M/s Rajasthan State Mines and Minerals Ltd. as rent a cab operator's service under Finance Act, 1994; Time bar for issuing show cause notice for demand of service tax; Applicability of extended period under proviso to Section 73(1) of Finance Act, 1994; Suppression of facts and submission of ST-3 returns; Legal precedent regarding time limitation for issuing show cause notice.

Analysis:
The appellant was providing vehicles to M/s Rajasthan State Mines and Minerals Ltd. under a contract, with the department claiming the service as rent a cab operator's service taxable under the Finance Act, 1994. A show cause notice was issued for non-payment of service tax for a specific period, leading to penalties imposed by the Deputy Commissioner. The appellant argued that the notice was time-barred due to a previous notice on the same grounds. The Commissioner (Appeals) upheld the order, prompting the appellant to file the present appeal. The Tribunal granted a stay and heard the matter for final disposal.

The appellant contended that the service provided was transportation of employees at predetermined rates, not falling under rent a cab operator's service. They argued that the demand was time-barred as a previous notice had been issued, invoking the extended period under the Finance Act, 1994. The department defended the order, citing a High Court judgment and alleging suppression of facts due to non-submission of ST-3 returns.

The Tribunal noted that a previous show cause notice had been issued for an earlier period, indicating the department's awareness of the appellant's activities. Referring to legal precedent, the Tribunal held that the extended limitation period could not be invoked for the subsequent period, making the show cause notice time-barred. As the demand was unsustainable on limitation grounds, the question of whether the service was taxable as rent a cab operator's service was not addressed. Consequently, the impugned order was set aside, and the appeal was allowed.