2016 (12) TMI 344 - AT - Service Tax

Valuation - Business Exhibition Services - For providing the said services the appellant is arranging for the booths, which are being booked by its customers. Some of the customers, after booking the booths, proceed for cancellation of the same. For cancelling the booth already booked by their customers, the booking amount is being refunded to them after deducting certain cancellation charges. The dispute relates to the said cancellation charges retained by the appellant - Held that - the same are being retained by the appellant from the initial amounts given to them for booking a booth, when the same is subsequently cancelled by the customer and the amount is refunded to them. Admitted position, which emerges is, that no booths are ultimately rented out by the appellant to their customers. As explained, such cancellation charges are for putting the appellant into inconvenience by initially booking the booths and subsequently cancelled. In as much as no service stand provided by the appellant to their customers and for which purpose no consideration was ever received by them, we are of the view that the cancellation charges recovered by the appellant cannot be held to be the consideration for providing business exhibition services. The same are thus not liable to service tax. Imposition of penalty - extended period of limitation - Held that - In the absence of any positive evidence produced by the Revenue to show that the penalty amount recovered by the appellant from the booth violators was not being made leviable to tax on account of any malafide, we find no justifiable reasons to invoke the longer period of limitation. As such we hold that in as much as the entire demand is beyond the normal period of limitation, same is hit by the bar of limitation and is not sustainable. Demand set aside - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues involved:
1. Valuation of services provided under Business Exhibition Services.
2. Penalties imposed for violation of booth sizes and enhanced booth height.
3. Invocation of longer period of limitation for initiating proceedings.

Detailed Analysis:
1. The first issue pertains to the valuation of services under Business Exhibition Services. The dispute revolves around cancellation charges retained by the appellant when customers cancel booth bookings. The Revenue argues that these charges are liable to service tax as the booths were pre-booked. However, the appellant contends that these charges have no nexus with the services provided. The tribunal ruled that since no booths were ultimately rented out and no service was provided, the cancellation charges cannot be considered as consideration for the services, hence not liable to service tax.

2. The second issue concerns penalties imposed for violating booth sizes and enhancing booth height. The Revenue asserted that these penalties are part of the value of services provided. The tribunal found that the penalties were charged for extra space availed by the customers due to increased booth size. Despite being named as penalties, the amount received is considered as consideration for the additional space provided, thus liable to service tax.

3. The third issue involves the invocation of a longer period of limitation for initiating proceedings against the appellant. The appellant argued that since the excess charges were reflected in their balance sheet, there was no suppression of information to warrant the extended period of limitation. Citing precedents, the tribunal held that in the absence of evidence showing malafide intent or suppression by the appellant, the longer period of limitation cannot be justified. Consequently, the demand beyond the normal limitation period was deemed unsustainable, leading to the appeal's allowance with consequential relief to the appellant.