2015 (1) TMI 224 - AT - Service Tax

On-line information and data base access or retrieval or both service - registration fee collected by the respondent was not declared in the ST-3 returns - Intention to evade tax - Suppression of facts - Held that - Registration fee is refundable in nature and hence the respondents are not liable to pay Service Tax in respect of this amount. In respect of the time bar issue, the Commissioner (Appeals) held in favour of the respondents are regularly submitting ST-3 returns and were accepted and paid Service Tax regularly and the Revenue has not raised any objection. Respondents were paying Service Tax as provider of online information and data base access or retrieval or both. The respondents are not disputing the taxability of their service. The only issue is whether the registration fee charged from their clients are to be added to the value of taxable service on which the respondents are liable to pay Service Tax. The registration fee is not refundable as such. The registration fee will be adjusted to the first purchase made by the clients in case no purchase is made the registration fee is not to be refunded. In view of this, the registration fee is not refundable as such, hence is required to be added to the gross value of taxable service on which the respondents are liable to pay Service Tax. - respondent has not disclosed this fact regarding collection of registration fee in the ST-3 returns. It is only during the scrutiny of records it was found that the registration fee is not added to the gross value of the taxable service. Hence the allegation of suppression with intent to evade tax is also sustainable. - Decided in favour of Revenue.

Issues:
1. Appeal against the order passed by the Commissioner (Appeals) allowing the appeal filed by the respondent on merits and time bar.
2. Whether the registration fee collected by the respondent forms part of the value of taxable service.
3. Time bar issue regarding the non-disclosure of registration fee in ST-3 returns by the respondent.

Analysis:
1. The Revenue filed an appeal against the order passed by the Commissioner (Appeals) allowing the respondent's appeal on merits and time bar. The respondent, registered under Service Tax, provided online information and data base access services along with trading activities. The Revenue issued a show cause notice for non-declaration of registration fee in ST-3 returns, demanding Service Tax, interest, and penalties. The adjudicating authority confirmed the demand. The Commissioner (Appeals) allowed the appeal, stating the registration fee was refundable, and the respondents regularly submitted ST-3 returns. The Revenue contended that the registration fee is part of the taxable service value, as it is non-refundable and to be adjusted in the first purchase by clients. The Revenue argued that the time bar applies as the registration fee was not declared earlier.

2. The Tribunal found that the registration fee, though non-refundable, should be added to the taxable service value for Service Tax. The respondents did not dispute the taxability of their service, and the registration fee was to be adjusted in the first purchase by clients. The Tribunal held that the registration fee, not being refundable, must be included in the gross value of the taxable service subject to Service Tax. Regarding the time bar issue, the Tribunal noted that the respondent did not disclose the collection of registration fee in ST-3 returns. The non-inclusion of the registration fee in taxable value was discovered during record scrutiny, supporting the allegation of suppression to evade tax. Consequently, the impugned order was set aside, and the Order-in-Original was restored, allowing the Revenue's appeal.

3. In conclusion, the Tribunal ruled in favor of the Revenue, emphasizing that the registration fee collected by the respondent forms part of the taxable service value subject to Service Tax. Additionally, the Tribunal found the non-disclosure of the registration fee in ST-3 returns constituted suppression with intent to evade tax, justifying setting aside the impugned order and restoring the Order-in-Original.

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