2016 (12) TMI 283 - AT - Service Tax

Demand - commercial and industrial construction services - period 10.9.2004 to 31.3.2008 - period of limitation - Held that - the longer period of limitation of five years is available to the Revenue when the assessee indulges in mala fide case of suppresses or misstatement with an intention to evade payment of tax. A belief which emerges on the basis of the circumstances available, leading the assessee not to pay the tax, is required to be held as bona fide belief. When viewed from this angle, we find that the Board s circular 80/2004 dated 17.9.2004 vide para 13.2, referred and relied upon by the ld. Advocate read with the certificate given by BSNL are sufficient to constitute a bona fide belief on the part of the assessee so as to entertain a view that inasmuch as the construction activities are being done for the office a Government of India Enterprises, the same would not get covered by the definition of commercial or industrial construction service. When asked, ld. DR has not been bring to our notice any positive evidence or fact to establish that the appellant made any suppression or misstatement of facts, with a mala fide intention to evade payment of duty. As such, we are of the view that the demand having been raised beyond the limitation period is hopelessly barred and is required to be set aside on this ground itself - demand set aside - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Demand of service tax under commercial and industrial construction services for the period 10.9.2004 to 31.3.2008. Interpretation of Board's Circular No. 80/2004 regarding the taxability of construction projects. Validity of the Show Cause Notice issued on 20.5.2009 and the applicability of the limitation period.

Analysis:

The judgment revolves around the demand of service tax amounting to ?4,37,168 against the assessee for providing commercial and industrial construction services from 10.9.2004 to 31.3.2008. The Revenue contended that the construction of an office building for M/s BSNL fell under commercial and industrial construction services, leading to the demand being confirmed along with interest and penalty by the lower authorities.

The appellant argued that the construction was not a commercial project based on a certificate from M/s BSNL stating that the building was for office use and not commercial purposes. Additionally, they referred to Board's Circular No. 80/2004, which clarified the taxability of constructions based on their use for commerce or industry. The appellant believed that their construction activities for a government enterprise did not fall under commercial or industrial construction services.

The dispute also involved the issue of limitation regarding the Show Cause Notice issued on 20.5.2009. The appellant claimed that the notice was time-barred due to their bonafide belief in not being liable for service tax based on the mentioned factors. The Revenue argued that the limitation period was not curtailed by the appellant's belief and could be extended if there was suppression or misstatement.

The tribunal noted that a longer limitation period applies when there is mala fide suppression or misstatement by the assessee to evade tax. In this case, the Board's circular and the certificate from M/s BSNL formed a bonafide belief for the appellant, exempting them from commercial or industrial construction services. As there was no evidence of suppression or misstatement by the appellant, the demand raised beyond the limitation period was considered barred and set aside, leading to the appeal being allowed in favor of the appellant.