2020 (2) TMI 1203 - AT - Service Tax

Tour Operator Service - taxability of the said service with effective date - demand of duty along with applicable interest and equivalent penalty - HELD THAT - It is very much clear that appellant had even paid its other service tax liability for extending services to one NSICT. Both the show cause notice as well as adjudication orders clearly indicate that appellant had not collected the required service tax from the customers. Therefore, its submission that it had not availed the benefits of cum duty u/s 67 of FA 1994 to which it was entitled has its force. This coupled with discharge of service tax liability against services extended to other service receivers for which no duty demand was made by the respondent department, it can be affirmatively stated that there was no intention traceable, in the entire proceeding concerning suppression of fact for the purpose of non-discharge of service tax. Interest - penalty - extended period of limitation - HELD THAT - The appellant disputes the bifurcation made by the Commissioner (Appeals) on payment of ₹ 1,24,867/- by showing payment towards interest charged at ₹ 9,541/- in para 5 of his order, which appellant states to have paid under the interest code and furnished documentary proof too, besides the fact that with recalculation on the basis of cum duty benefit ₹ 8,88,790/- was stated to be refundable to the appellant, which it had never sought for. Be that as it may a bare reading of Section 73 78 of FA would clearly indicate that interest component is not structured in service tax liability to invoke section 78 and thereby justify extended period. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of duty liability, interest, and penalties under various sections of the Finance Act 1994 challenged in appeal. Dispute over non-payment of service tax, interest, and penalties. Allegations of suppression to evade duty liability. Justification of extended period for penalty imposition under Section 78.

Analysis:
1. The appellant contested the duty liability, interest, and penalties imposed by the Commissioner (Appeals) under the Finance Act 1994. The appellant provided Tour Operator Service, which became taxable in May 2008. The tax authorities discovered non-payment of service tax during an audit in February 2010. The appellant claimed to have paid the entire service tax dues, including interest, and questioned the sustainability of the suppression allegations.

2. The appellant argued that it discharged the entire service tax liability before the show cause notice was issued in 2013. The appellant cited cases to challenge the invocation of the extended period for penalty imposition. The appellant also disputed the bifurcation of payments made towards interest and claimed a refundable amount based on cum duty benefit calculations.

3. The Respondent Department supported the Commissioner (Appeals)'s order, citing the appellant's non-response to pay interest despite multiple reminders. The Department alleged wilful suppression by the appellant, justifying the penalty imposition. The Department contested the appellant's claims regarding the payment of interest and the lack of intention to evade service tax.

4. The Tribunal analyzed the case records and observed that the appellant obtained service tax registration in 2010 but discharged the duty liability belatedly. The dispute primarily revolved around the interest component, with conflicting claims on payment. The Tribunal noted the appellant's payment of other service tax liabilities and the absence of intention to suppress facts for tax evasion purposes.

5. The Tribunal allowed the appeal, setting aside the Commissioner (Appeals)'s order dated 25-06-2018. The Tribunal concluded that the interest component did not warrant the invocation of Section 78 for an extended period under the Finance Act 1994. The judgment was pronounced on 31-01-2020.