2019 (5) TMI 1491 - AT - Service Tax

Clearing Forwarding Agents Services - scope of SCN - Extended period of limitation - penalty - HELD THAT - It is seen that the appellant had not disputed the fact of providing of services and have simplicitor submitted that the show cause notice issued to them is vague inasmuch as the category of services provided by them has not been specified - As it is not the appellant s case that the services provided by them were excluded from the areena of service tax or the same were exempted under any particular Notification, there are no merits in their case. Extended period of limitation - HELD THAT - As the negative list era was introduced in 2012 itself there could be a bona fide belief on the part of the appellant to entertain a belief that the services provided by them are not taxable. In the absence of any evidence to the contrary indicating any mala fide on the part of the appellant,the longer period of limitation is not available to the Revenue - the demand is set aside on the issue of time bar. As a part of the demand may fall within the limitation period, the Original Adjudicating Authority is directed to re-quantify the same to whom matter is being remanded. Penalty - HELD THAT - In the absence of mala fide on the part of the appellant the imposition of penalty upon them is not justified - penalty set aside. Appeal allowed by way of remand.

Summary

Issues:
- Failure to pay service tax on services provided to cement companies
- Vagueness in the show cause notice
- Imposition of penalties under various sections
- Invocation of longer period limitation for demand confirmation

Issue 1: Failure to pay service tax on services provided to cement companies
The appellant, a Clearing & Forwarding Agent registered with the Service Tax Department, was found to be providing sales promotion services to cement companies without discharging service tax obligations. The authorities initiated proceedings against the appellant, leading to a demand of service tax amounting to &8377; 10,10,028 for the period 2012-13 to 2014-15. The Original Adjudicating Authority confirmed the demand along with interest and penalties under relevant sections of the Finance Act. The Commissioner (Appeals) upheld the decision, prompting the appellant to appeal the order.

Issue 2: Vagueness in the show cause notice
The appellant contested the show cause notice, claiming it was vague as it did not specify the category of services provided. However, the Appellate Authority found that the appellant was indeed providing services to cement companies, as evidenced by statements and replies during the proceedings. The appellant's failure to pay service tax despite knowing the tax liability and the absence of legitimate reasons for non-compliance led to the confirmation of the demand and penalties by invoking relevant provisions of the Act.

Issue 3: Imposition of penalties under various sections
The appellant's argument of the services being potentially non-taxable due to the introduction of the negative list in 2012 was considered. Despite the possibility of a bona fide belief on the appellant's part regarding the taxability of their services, the Appellate Authority set aside the demand on the grounds of time bar. The absence of evidence indicating mala fide intentions led to the reversal of penalties imposed under Section 78 of the Act.

Issue 4: Invocation of longer period limitation for demand confirmation
The Appellate Authority determined that the longer period limitation for confirming the demand was not applicable in this case due to the introduction of the negative list in 2012. As a result, the demand was set aside on the issue of time bar, and the matter was remanded to the Original Adjudicating Authority for re-quantification of the demand falling within the limitation period.

In conclusion, the appeal was disposed of with the demand set aside on the grounds of time bar and penalties being reversed due to the absence of mala fide intentions on the part of the appellant.