2017 (11) TMI 1497 - AT - Service Tax

Consultancy Engineering service - sub-consultancy, whether exempt or not? - extended period of limitation - Held that - the appellant were engaged in providing consulting engineer service and claimed sub-consultancy work as exempted service - if such is the situation, the case of mis-representation etc. to invoke extended period is not tenable. Even otherwise, the appellants did declare all the considerations received by them in their statutory returns filed with the Department - demand for extended period cannot be sustained - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Dispute over non-payment of service tax by the appellant for services rendered as a sub-consultant.
2. Appellant's contention regarding limitation period for the demand of service tax.
3. Revenue's argument that service tax should be paid on all considerations received by the appellant.

Analysis:
1. The appeal addressed the dispute concerning the appellant's liability to pay service tax on the consideration received for services rendered as a sub-consultant. The Revenue asserted that the appellant should pay service tax on all considerations received during their consulting work, while the appellant argued that they had already paid service tax on their consulting work and were not liable as sub-consultants. The Original Authority confirmed a substantial service tax liability against the appellant, along with a penalty under Section 78 of the Finance Act, 1994.

2. The appellant contended that they had been diligently paying service tax on their Consulting Engineer Service but believed in good faith that service tax was not applicable to services rendered as a sub-consultant since the main consultants were already paying tax on the entire consideration. The appellant challenged the demand primarily on the grounds of limitation, citing that the demand was issued beyond the normal limitation period. The appellant requested the impugned order to be set aside due to the limitation issue and sought the cancellation of the penalty imposed.

3. The Revenue argued that the appellant should have paid service tax on all considerations without any exclusion for sub-consultant services, emphasizing that there could be no genuine belief that service tax was not applicable when receiving consideration for consulting engineer services. After hearing both parties and reviewing the records, the Tribunal addressed the limitation issue as the primary argument raised by the appellant. The Tribunal noted that the appellant had disclosed all considerations in their statutory returns, including exempted services like sub-consultancy work. The Tribunal found that the demand for the extended period was not sustainable as the appellant had provided true and complete details in their records and returns. Consequently, the Tribunal set aside the service tax liability for the extended period and the penalty, confirming the liability only for the normal period as declared by the appellant.

In conclusion, the Tribunal ruled in favor of the appellant on the limitation issue, setting aside the service tax liability for the extended period and the penalty imposed, while confirming the liability for the normal period as declared by the appellant.