2019 (3) TMI 1178 - HC - Service Tax

Extended period of limitation - bonafide belief that he is not a photographer in commercial trade parlance and not liable to service tax - assessee registered himself with the department in October, 2005 and he has paid service tax for the services rendered by him till September, 2006. - Demand for the period prior to October 2005 Whether the assessee would fall within the scope of Section 65(105)(zb)? - Held that - Section 65(105)(zb) of the Act not only restricts the definition to photography studio alone but also to an agency. The assessee is an individual, a proprietary and he is an agency in the legal sense of the terms. Therefore, Section 65(105)(zb) of the Finance Act would stand attracted and the assessee is liable to pay service tax. Extended period of limitation - Held that - The facts clearly disclose that the assessee failed to get himself registered with the department and consequently would fall within the scope of suppression and extended period of limitation could be invoked. Appeal dismissed - decided against assessee.

Summary

Issues:
1. Whether the Tribunal was justified in upholding the demand and interest without considering the plea on the invocation of the extended period of limitation?
2. Whether the extended period of limitation was correctly invoked considering the belief of the assessee that the services provided were not taxable?

Analysis:

Issue 1:
The first issue raised in the appeal questions the Tribunal's decision to uphold the demand and interest without addressing the invocation of the extended period of limitation. The appellant argued that as an individual professional photographer, the services provided did not fall under taxable services as per Section 65(105)(zb) of the Finance Act. However, the Tribunal dismissed this contention.

Issue 2:
The second issue concerns the invocation of the extended period of limitation. The appellant claimed a bona fide belief that the services provided were not taxable, which should preclude the extended period of limitation. The period in question was between October 2002 and September 2006. Despite the appellant registering with the department in October 2005 and paying service tax until September 2006, a show cause notice was issued in 2008.

The appellant argued that being an individual photographer without a photography studio or agency, the services were not taxable. However, the court held that the appellant fell within the definition of a professional photographer as per Section 65(79) of the Finance Act. Therefore, Section 65(105)(zb) applied, making the appellant liable for service tax.

Regarding the extended period of limitation, the court found that the appellant's failure to register earlier and the subsequent audit revealed non-compliance, justifying the invocation of the extended period. The court distinguished a precedent cited by the appellant, emphasizing the lack of fraud or suppression in the present case.

In conclusion, both substantial questions of law were decided against the appellant, leading to the dismissal of the appeal. The court upheld the demand for service tax and interest, while also confirming the deletion of the penalty imposed.