2014 (8) TMI 446 - AT - Service Tax

Imposition of penalty - Invocation of extended period of limitation - Malafide intention - Commissioner invoked Section 80 and deleted penalty - Held that - Tribunal has taken note of the fact that different interpretations was being given by judicial forums to the classification of the said services. In such a case, the extended period of time cannot be invoked - demand beyond the period of normal limitation period is not sustainable. The lower authority would quantify the demand falling within the limitation period. As regards the Revenue s appeal, the same is against that part of the impugned order vide which benefit under Section 80 of Finance Act, 1994 stands extended to the assessee. As we have also held that there was no mens rea on the part of the assessee, thus limiting the demand within the period of limitation, benefit of Section 80 stands rightly extended by Commissioner (Appeals) - Following decision of Brij Motors v. CCE 2011 (11) TMI 410 - CESTAT, NEW DELHI - Decided in favour of assessee.

Summary

Issues:
1. Classification of services for service tax liability.
2. Invocation of extended period of limitation.
3. Benefit under Section 80 of the Finance Act, 1994.

Classification of services for service tax liability:
The judgment pertains to appeals filed by both the assessee and the Revenue arising from the same impugned order passed by the Commissioner (Appeals). The appellant had entered into an agreement with M/s. ICICI bank for providing services related to marketing of products under "retail finance business" and for sourcing the business. The demands were confirmed against the appellant for the period 2004-05 and 2005-06, as they were found to have rendered services only under the category of business auxiliary service. The appellant contended that during the relevant period, there was confusion regarding the classification of services, leading to uncertainty whether the services provided were liable to service tax under the category of business auxiliary service or business support service introduced from 1-5-2006. The appellant acknowledged part of the demand falling within the limitation period and did not dispute it, citing a Tribunal decision in a similar case for support.

Invocation of extended period of limitation:
The Revenue argued that the appellant, by not registering themselves, had suppressed this fact from the Revenue, justifying the invocation of the extended period of limitation against them. However, the Tribunal referred to a previous decision in the case of Brij Motors where it was held that in situations where different interpretations were being given by judicial forums regarding the classification of services, the extended period of time cannot be invoked for raising a demand. Therefore, the Tribunal concluded that the demand beyond the normal limitation period was not sustainable, and penalties were not imposable due to the lack of mens rea on the part of the assessee. The lower authority was directed to quantify the demand falling within the limitation period.

Benefit under Section 80 of the Finance Act, 1994:
Regarding the Revenue's appeal against the extension of benefit under Section 80 of the Finance Act, 1994 to the assessee, the Tribunal found that since there was no mens rea on the part of the assessee and the demand was limited within the period of limitation, the benefit of Section 80 was rightly extended by the Commissioner (Appeals). Consequently, the Revenue's appeal was rejected, and both appeals were disposed of accordingly.