2015 (12) TMI 548 - AT - Service Tax

Demand of service tax - Security Agency Services - Invocation of extended period of limitation - Imposition of penalty - Held that - Leviability of the Service Tax on Security Agency Services on the appellants is not in dispute. It is submitted that the demand of service tax for the period April 1999 to 11.3.2004 by show cause notice dated 29.6.2004 is hit by limitation. - Appellants were aware the levy of tax and they have not paid the tax and therefore it is a fit case to invoke the extended period of limitation. Hence, the extended period of limitation would be invoked in this case. Central Excise officers during the visit had detected the non-payment of the tax. So, the imposition of penalty is warranted. However, considering the overall facts and circumstances of the case, in our view, the imposition of penalty under Section 78 of the Finance Act, 1994 is sufficient. We agree with the submission of Learned Advocate that the Adjudicating Authority had not given the option to pay penalty 25% of the tax alongwith the entire amount of tax and interest, within the specified period. So, they are entitled to get such option under Section 78 of the Act 1994. - we modify the impugned order in so far as the demand of Service Tax alongwith interest is upheld. The penalty imposed under Section 78 is also upheld and the other penalties are set aside. - Decided partly in favour of assessee.

Issues:
1. Dispute over the leviability of Service Tax on Security Agency Services.
2. Quantification of the demand of tax including cum-tax benefit and reimbursement expenses.
3. Whether the demand of tax is barred by limitation.
4. Imposition of penalty for non-disclosure and non-payment of tax.

Analysis:

1. The appeals revolved around the leviability of Service Tax on Security Agency Services provided by two appellants. The central issue did not concern the nature of services but rather the quantification of the demand of tax, including the inclusion of cum-tax benefit and reimbursement expenses.

2. The dispute regarding the quantification of the demand of tax was crucial. The Learned Advocate argued for the inclusion of cum-tax benefit and exclusion of reimbursable expenses from the assessable value. Citing relevant precedents, the Advocate highlighted the need for proper quantification. The Tribunal agreed that reimbursement expenses should be included but acknowledged the validity of cum-tax benefit, directing the appellants to submit a statement for claiming such benefit.

3. The question of whether the demand of tax was barred by limitation was raised. The Revenue argued for the invocation of the extended period of limitation due to non-disclosure and non-payment of tax by the appellants. The Tribunal concurred, invoking the extended period of limitation based on the appellants' awareness of the tax liability and their actions to avoid payment.

4. Lastly, the imposition of penalty was deliberated upon. The appellants contended that since they had paid the entire tax amount, penalty imposition was unwarranted. However, the Tribunal found the imposition of penalty under Section 78 justified due to non-disclosure and non-filing of returns. Yet, considering the circumstances, the Tribunal upheld the penalty under Section 78 and granted the appellants the option to pay 25% of the tax along with the entire amount of tax and interest within a specified period.

In conclusion, the Tribunal modified the impugned order by upholding the demand of Service Tax with interest, maintaining the penalty under Section 78, and setting aside other penalties. The Adjudicating Authority was directed to determine the tax demand considering cum-tax benefit, and the appellants were given the opportunity to submit a statement within thirty days. The appellants were also granted the option to pay the penalty under Section 78 as per the specified terms.

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