2020 (2) TMI 812 - HC - Service Tax

Invocation of Extended period of Limitation - presence of two views as whether the service provided by the respondent is Management or Business Consultancy or not - HELD THAT - The services rendered by the respondent would fall within the definition of Section 65(105(r) of the Act inasmuch as the services rendered by the respondent is a business consultancy service which would partake its character from the definition as per definition clause. Since respondent is engaged in providing service either directly or indirectly in connection with the management of any organization or business, said activity would fall within the four corners of management or business consultancy service . Hence, it is taxable service as per the provisions of the Act. It is because of this activity carried out by the respondent, Tribunal has rightly held that the definition is to be construed as inclusive definition and any service provided in connection with the management or business consultancy is liable to tax. Invocation of extended period of limitation when respondent is a Government organization - Whether under the facts and circumstances of the case, the CESTAT is right in restricting the demand only for normal period without discussion and finding with regard to culpability of the respondent? - HELD THAT - The SCN which came to be issued to respondent - assessee was based on intelligence input gathered by the officers of the appellant-revenue that there has been evasion of payment of service tax on the taxable services rendered by respondent - assessee. It is not the case of the appellant that there was either fraud perpetrated by the respondent or there has been any collusion or willful mis-statement of facts before the revenue. In the absence of any of these ingredients present, we are of the considered view that invoking of extended period of limitation would not arise. The Tribunal is just and correct and question of applying the extended period of limitation as provided in the proviso to Sub-section (1) of Section 73 of the Act would not arise in the facts and circumstances of this case and demand raised for the restricted normal period as prescribed under Sub-section (1) of Section 73 of the Act is proper - Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Classification of services provided by the respondent as 'Management or Business Consultancy'.
2. Applicability of the extended period of limitation to the respondent, a government organization.
3. Legality of restricting the demand only for the normal period without addressing the culpability of the respondent.

Issue-Wise Detailed Analysis:

1. Classification of Services:
The primary issue revolves around whether the services provided by the respondent fall under the category of 'Management or Business Consultancy' as per Section 65(105)(r) of the Finance Act, making them taxable. The Tribunal confirmed that the services rendered by the respondent, which involved providing assistance to industrial entrepreneurs, do indeed fall under this category. The Tribunal emphasized that any service provided in connection with the management of an organization or business is taxable under this category. The finding was based on the inclusive nature of the definition, which encompasses various services required for setting up an industry.

2. Applicability of Extended Period of Limitation:
The Tribunal's decision to limit the demand to the normal period and not invoke the extended period of limitation was scrutinized. Under Section 73(1) of the Finance Act, the extended period of five years can be invoked in cases involving fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions with intent to evade tax. The Tribunal found that none of these conditions were met in the respondent's case. The show-cause notice did not allege any fraudulent activities or willful misstatements by the respondent. Thus, the Tribunal held that invoking the extended period was inappropriate, especially considering the respondent was a government organization and there could be two views on the classification of services.

3. Restriction to Normal Period and Culpability:
The Tribunal's decision to restrict the demand to the normal period without discussing the culpability of the respondent was upheld. The Tribunal noted that the show-cause notice lacked allegations of fraud or willful misstatement, which are prerequisites for invoking the extended period. It concluded that the absence of such allegations meant that the extended period could not be applied. The Tribunal also pointed out that the respondent's services were included in the negative list issued by the government effective from 01.07.2012, further supporting the decision to limit the demand to the normal period.

Conclusion:
The Tribunal's order was affirmed, dismissing the appeal and confirming that the services provided by the respondent are taxable under 'Management or Business Consultancy'. However, the extended period of limitation was deemed inapplicable due to the lack of allegations of fraud or willful misstatement. The demand was rightly restricted to the normal period, and no further culpability was attributed to the respondent. The appeal was dismissed with no order as to costs.