2017 (11) TMI 159 - AT - Service Tax

Time Limitation - non-payment of service tax - case of appellant is that the assessee was under the impression and bona fide belief that no Service Tax is payable by them and they did not collect any Service Tax from the services of commission agent provided by them from the service recipients, and there was no malafide intent - Held that - there is suppression but still I do not find any intention on the part of the assessee for not paying Service Tax as Commission agent under BAS. Business Auxiliary Service has gone into lot of change from 01.07.2003 and since the services provided in the year 2005-07, there was no of confusion in this period about payment of Service Tax on Commission agent service for which they failed to collect/charge Service Tax from the recipient of Service and there cannot be any intention for if they have knowledge about Service tax liability they could have charged and collected it from the manufacturer. In turn the manufacturer would have availed cenvat credit on the service tax so paid as the services of procurement of sale orders for their manufactured goods fell into definition of input services. Hence, by no stretch of imagination, it may be held that this was intention for not paying Service tax - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the demand for Service Tax is barred by limitation.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal, which set aside the Order-in-Original due to the demand being considered barred by limitation. The case involved the respondents receiving commission for procuring orders of goods on behalf of principals without being registered with the Service Tax department or paying any Service Tax. A show cause notice was issued proposing a demand of Service Tax along with interest and penalties for the period 2005-06 & 2006-07. The adjudicating authority confirmed the demand, but the Commissioner(Appeals) allowed the appeal, citing limitation as the reason. The Revenue contended that the balance sheets were filed only in response to summons and relied on legal precedent to support their case.

The respondents argued that they believed no Service Tax was payable as commission agents were exempted under Business Auxiliary Services. They claimed there was no intent to evade tax and highlighted the exemption notification. The Commissioner(Appeals) waived the pre-deposit requirement and considered the case on merits, focusing on the limitation aspect and the revenue neutrality claimed by the appellant due to the exemption notification. The Commissioner analyzed the changes in Business Auxiliary Services and the confusion regarding Service Tax liability during the relevant period. Various legal judgments were referenced to determine the presence of suppression and intent to evade tax.

The Commissioner concluded that although there was suppression, there was no intention on the part of the assessee to avoid paying Service Tax as a Commission agent under Business Auxiliary Services. The Commissioner highlighted the lack of clarity during the period in question and referenced legal precedents to support the decision. Ultimately, the Commissioner held that the demand was barred by limitation and set aside the Order-in-Original. The Tribunal, after reviewing the grounds of appeal and the Commissioner's findings, rejected the Revenue's appeal, upholding the decision that the demand was indeed barred by limitation.