2019 (2) TMI 313 - AT - Service Tax

Extended period of limitation - no willful misstatement and suppression of facts - Valuation - the value of the goods were not separately shown by them either in the contract or in the Bills so raised - N/N. 12/2003-ST dated 26.02.2003 - demands stand confirmed by invoking the longer period - Held that - The appellant were duly registered with the department and were filing the ST-3 returns by showing payment of Service Tax on the value of the services as indicated in the contracts entered by them with the said Public Sector Undertaking. The appellant was entertaining a bona fide belief and there was no mala fide on their part so as to justifiably invoke the longer period of limitation - extended period is not available to the Revenue. However, as a part of demand falls within the limitation period we direct the adjudicating authority to re-quantify the demands against all the appellants for which purpose, the matter is remanded to him - appeal allowed in part - part matter on remand.

Summary

Issues:
1. Assessment of Service Tax liability based on contract terms.
2. Dispute regarding the value of goods used in services.
3. Allegations of willful misstatement and suppression by the Revenue.
4. Invocation of longer period of limitation for demand confirmation.
5. Bifurcation of services and goods value in the contract.
6. Applicability of extended period for demand quantification.
7. Imposition of penalties on the assesses.

Analysis:
1. The appellants had a contract with M/s. Obra Thermal Power Station for repair and maintenance services, where the terms specified the value of services and goods to be used. The Service Tax liability was discharged based on the services' value mentioned in the contract.

2. The Revenue disputed the value of goods used in services, alleging lack of evidence from the appellants. This disagreement led to the initiation of proceedings against the appellants, citing willful misstatement and suppression, and invoking a longer period of limitation.

3. The appellant's representative admitted that the value of goods was not separately indicated in the contract or bills. However, they argued against the limitation period, stating that they paid duty based on the contract's bifurcated values for services and goods, without any mala fide intention.

4. The Tribunal observed that the demands were confirmed using the extended period, but considering the appellants' compliance with Service Tax returns and their belief in good faith, the longer limitation period was deemed unjustified. The matter was remanded for re-quantification within the limitation period.

5. Since no mala fide intent was found on the appellants' part, the penalties imposed on them were set aside, as there were no grounds to uphold the penalties considering the circumstances.

6. In conclusion, the appeal was disposed of accordingly, with the Tribunal ruling in favor of the appellants on the limitation period issue and directing a re-assessment of demands within the limitation period, while also overturning the penalties imposed on the assesses.