2016 (11) TMI 1007 - HC - Service Tax

Appeal filed under Section 35-G of Central Excise Act, 1944 - time bar - levy of service tax on the appellant, although payment was received before 1.7.2003, when the service was not taxable under the Finance Act, 2003 - Held that - the question of limitation has been decided in favour of the assessee by the Ist Appellate Authority. The department thereafter went in appeal but the Tribunal has not addressed this issue at all and has proceeded to decide the matter on merits of the case. The issue of limitation definitely requires reconsideration by the Tribunal. The matter is remanded to the Tribunal for reconsideration of this issue. The Tribunal shall hear and decide the matter on merits and in accordance with law within the next three months and a copy of this order be produced before the Tribunal within the next 15 days - appeal disposed off - matter on remand.

Summary

Issues Involved:
1. Whether the Tribunal was legally justified in levying service tax on the appellant for a period when the service was not taxable under the Finance Act, 2003?
2. Whether the Tribunal was legally justified in not deciding the appeal on the ground of limitation?
3. Whether the Tribunal was legally justified in confirming service tax and penalty?

Analysis:

Issue 1:
The appellant contended that the demand of service tax was barred by limitation as the payment was received before the service became taxable under the Finance Act, 2003. The Ist Appellate Authority found that the appellant had collected advance fees before the taxable period, and the revenue was aware of this fact. The Authority held that there was no suppression of fact and that the demand for service tax was indeed barred by limitation. The Tribunal did not address the limitation issue and proceeded to decide the case on its merits. The High Court remanded the matter to the Tribunal for reconsideration on the limitation issue, emphasizing that the allegation of suppression of fact was unfounded.

Issue 2:
The appellant argued that the Tribunal erred in not deciding the appeal on the ground of limitation. The Ist Appellate Authority had ruled in favor of the appellant on the limitation issue, stating that the demand for service tax was time-barred. However, the Tribunal did not address this issue and proceeded to decide the case on its merits. The High Court directed the Tribunal to reconsider the limitation issue and decide the matter in accordance with the law within the next three months.

Issue 3:
The Tribunal had confirmed the service tax and penalty without addressing the limitation issue raised by the appellant. The High Court found that the Tribunal had not considered the limitation aspect and remanded the matter for reconsideration. The High Court did not delve into the merits of the case but focused on the procedural aspect of the limitation issue. The appeal was disposed of with the direction for the Tribunal to reconsider the matter within a specified timeframe.

In conclusion, the High Court's judgment primarily focused on the limitation issue raised by the appellant, emphasizing that the demand for service tax was time-barred due to the absence of suppression of fact. The Tribunal was directed to reexamine the limitation aspect and decide the case accordingly.