2017 (4) TMI 36 - AT - Service Tax

Project management and marketing consultant - Business auxiliary service - period prior to 01.07.2003 - validity of SCN - Held that - the SCN did indicate more than one service for tax liability of the appellant. The contract under which the considerations were received were composite and covers various activities. It is clear that split up figures for each one of the taxable service of different nature were not provided in the SCN. The same is possible only when documents with supporting evidence were submitted by the appellant. Such details could have been submitted even at the time of adjudication. The first Original order was passed ex-parte - The said order was set aside and the first appellate authority remanded the case for a fresh decision. Real Estate Consultant - Held that - it is clear that the appellant did provide taxable service under the above category. As such, the appellants are liable to service tax under above said category during the relevant period. Extended period of limitation - Held that - admittedly, the appellants raised various bills to Rajasthan Housing Board which indicated service tax element separately. Though, the appellants submitted that they did not receive the tax amount from their clients, the incidence of tax liability is apparently in the knowledge of the appellant and they have not got themselves registered with the Department, neither filed periodical returns. In the facts of this case, we find that a demand for extended period in terms of proviso to Section 73 (1) is rightly invokable. Penalty u/s 76 and 78 - invocation of section 80 - Held that - The appellants though raised bill with service tax, have not received the tax amount from the Rajasthan Housing Board. This is being categorically asserted by the appellants and there is no contrary finding by the lower authority. As such, we find there is a reasonable cause for non-payment of service tax by the appellants and accordingly, the provisions of Section 80 can be applied for waiver of penalty imposed u/s 76 and 78. Appeal allowed - decided partly in favor of assessee.

Summary

Issues: Appellant's liability to service tax in connection with activities under agreement with Rajasthan Housing Board, Jaipur; Vagueness of show cause notice; Correct classification of activities for tax liability; Demand for extended period; Applicability of penalties; Invocation of Section 80 for waiver of penalties.

Analysis:
1. Appellant's Liability to Service Tax:
The appeals revolve around the appellant's liability to service tax concerning activities performed under an agreement with Rajasthan Housing Board, Jaipur. The Revenue contended that the activities are taxable, leading to a show cause notice and subsequent demand confirmation by the Original Authority. The Commissioner (Appeals) remanded the case for re-evaluation, focusing on the correct quantification of service tax. The issue primarily centered on the classification of activities under taxable categories like Real Estate Agent Service or Business Auxiliary Service.

2. Vagueness of Show Cause Notice:
The appellant argued that the show cause notice lacked specificity, rendering the demand invalid. The notice failed to provide a clear breakdown of taxable services, attributing to the absence of data from the appellant. The Commissioner (Appeals) acknowledged this deficiency and remanded the case for a fresh decision, emphasizing the necessity for accurate classification and liability determination.

3. Correct Classification of Activities:
The appellant contended that the activities performed under the contract encompassed various works that did not fit neatly into specific taxable categories. The parties involved in a composite contract necessitated a thorough examination to ascertain the correct classification for tax liability. The subsequent proceedings delved into the details of the agreement to determine the applicability of service tax under the Real Estate Consultant category.

4. Demand for Extended Period and Penalties:
The case also addressed the demand for an extended period, as the appellant had raised invoices indicating service tax without receiving payments. The authorities justified the demand, citing the appellant's awareness of the tax liability and failure to register or file returns. The discussion extended to the imposition of penalties under Sections 76 and 78, with the appellant invoking Section 80 for penalty waiver due to reasonable cause for non-payment.

5. Invocation of Section 80 for Waiver of Penalties:
The Tribunal analyzed the applicability of Section 80 for penalty waiver, considering the appellant's invoicing practices and non-receipt of service tax payments. Finding a reasonable cause for non-payment, the Tribunal set aside the penalties imposed under Sections 76 and 78, while affirming the appellant's liability to service tax under the Real Estate Consultant category. The appeals were partly allowed, emphasizing the need for accurate classification and compliance with tax obligations.

This detailed analysis encapsulates the key legal issues and the Tribunal's decision regarding the appellant's service tax liability and related penalties, providing a comprehensive overview of the judgment.