2018 (2) TMI 155 - AT - Service Tax

Extended period of limitation - the appellant had already discharged duty liability for the period 24.6.2005 to 14.7.2005 but had not discharged duty liability for the period 15.6.2005 to 23.6.2005 - Held that - The duty liability for the period 24.06.2005 to 14.7.2005 was discharged vide challans dt. 6.9.2005 (1) and dt. 7.10.2005 (4). It is apparent that the respondent did not have any reason not to pay the service tax for the said period - For the period 10.09.2004 to 16.09.2004 the respondent had not included the value of such service in their ST.3 Returns. It is apparent that having no reason to claim exemption on the said activity. The appellant did not to disclose the said income in the ST-3 Return and did not pay the service tax leviable thereon. Invocation of extended period of limitation is fully justified - appeal allowed - decided in favor of Revenue.

Summary

Issues:
1. Liability of service tax on transport of goods by air for export during specific periods.
2. Exemption notifications and legislative amendments affecting the service tax liability.
3. Bonafide intention of the party in non-payment of service tax.
4. Invocation of extended period of limitation for tax recovery.

Analysis:

Issue 1: Liability of service tax on transport of goods by air for export during specific periods
The case involved a dispute regarding the liability of service tax on the transport of goods by air for export during specific periods. The appellant argued that the service was taxable during certain periods due to legislative amendments and exemption notifications. The respondent had voluntarily paid part of the tax for a particular period and later paid the rest with interest. The adjudicating authority dropped the demand, but the appellant contended that there was no exemption during the said period, indicating malafide intention on the respondent's part.

Issue 2: Exemption notifications and legislative amendments affecting the service tax liability
The sequence of legislative amendments and exemption notifications was crucial in determining the service tax liability. Various notifications were issued, introducing exemptions and rules related to the taxation of services provided by air transporters for export purposes. The appellant argued that the respondent's service became liable to service tax due to changes in rules regarding payment received in foreign exchange. The contest primarily revolved around the interpretation of these notifications and their impact on the tax liability during specific periods.

Issue 3: Bonafide intention of the party in non-payment of service tax
The key contention between the parties was the bonafide intention behind the non-payment of service tax. The impugned order examined the filing of ST-3 Returns, the timing of payments, and the disclosure of taxable income by the respondent. It was observed that the respondent had not included the value of services in their returns for certain periods, indicating a lack of reason to claim exemption and non-disclosure of income. The invocation of the extended period of limitation was deemed justified based on these findings, leading to the setting aside of the impugned order and allowing the appeal of the Revenue.

Issue 4: Invocation of extended period of limitation for tax recovery
The decision to invoke the extended period of limitation for tax recovery was based on the respondent's actions regarding non-disclosure of taxable income and non-payment of service tax during specific periods. The appellant's argument that there was no reason for the respondent to claim exemption and the subsequent non-disclosure of income supported the justification for invoking the extended period of limitation. The impugned order was set aside, and the appeal of the Revenue was allowed, leading to the disposal of the cross-objection as well.

This detailed analysis of the legal judgment highlights the issues related to the liability of service tax on the transport of goods by air for export, the impact of exemption notifications and legislative amendments, the bonafide intention of the parties, and the invocation of the extended period of limitation for tax recovery. The case underscores the importance of compliance with tax regulations and the consequences of non-disclosure or non-payment of taxes during specific periods.