2021 (8) TMI 83 - AT - Service Tax

Refund claim of pre-deposit - Applicability of normal period of limitation - whether the normal period of limitation of 18 months is to be applied or 30 months to be applied for demanding service tax for the period 2014-2015 when show-cause notice is issued after 14/05/2016? - period from April 2013 to March 2015 - HELD THAT - This issue is squarely covered by the decision of the Division Bench of this Tribunal in the case of M/S AVECO TECHNOLOGIES PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS HYDERABAD 2018 (2) TMI 1269 - CESTAT HYDERABAD where it was held that The Finance Act 2016 does not contain any provision according to a retrospective operation to the said Act. As such demands which had already become irrecoverable as on 13-5-2015 could not by virtue of the amendment with effect from 14-5-2016 get resurrected or revived. It is found that on the date of amendment which was effective from 14/05/2016 the limitation period for April 2014 to September 2014 has already lapsed and the subsequent amendment cannot give life to the dead case as held by the Division Bench of this Tribunal in Aveco Technologies Pvt. Ltd. The confirmation of demand for the period April 2014 to September 2014 is bad in law - as far as demand for the period October 2014 to March 2015 the matter is remanded back to the original authority for quantification of the demand and adjusting the demand against the mandatory predeposit and after doing the same the remaining amount will be refunded to the appellant if any - appeal allowed in part and part matter on remand.

Summary

Issues Involved:
- Interpretation of the period of limitation for demanding service tax.
- Application of retrospective effect of amendments to taxation laws.

Analysis:

Issue 1: Interpretation of the period of limitation for demanding service tax
The appellant, engaged in rendering taxable services, challenged the demand of service tax for the period from April 2013 to March 2015. The key contention revolved around whether the normal period of limitation of 18 months or 30 months should be applied when a show-cause notice is issued after a certain date. The appellant argued that the law prevailing at the time of the activity should be applied, citing the decision in CIT Vs. Vatika Township Pvt. Ltd. The appellant further referenced the case of Govinddas & Ors. Vs. Income Tax Officer & Another to support the argument that amendments related to assessment should have only prospective effects. Additionally, the appellant highlighted the case of Aveco Technologies Pvt. Ltd. Vs. CC, Hyderabad, where it was held that an amendment to the Customs Act was not retrospective and could not extend the time limit for issuing notices. The appellant contended that the impugned order failed to consider that the amendment should not have retrospective effect.

Issue 2: Application of retrospective effect of amendments to taxation laws
The Assistant Commissioner argued that the Revenue rightly invoked the extended period of 30 months for confirming the demand of service tax for the period 2014-15, based on the date of issuance of the show-cause notice. However, upon thorough consideration of the submissions and the legal precedents cited, the Tribunal found that the amendment extending the limitation period from 18 months to 30 months could not revive demands that had already become time-barred before the amendment. Referring to the Division Bench decision in the case of Aveco Technologies Pvt. Ltd., the Tribunal emphasized that statutory amendments are presumed to be prospective unless explicitly declared retrospective. The Tribunal upheld the Division Bench decision, which was further supported by the Apex Court, and concluded that demands for the period where the limitation period had already lapsed could not be confirmed by applying the amended period. Consequently, the Tribunal set aside the demand for the period April 2014 to September 2014, and remanded the matter back to the original authority for quantification and refund adjustments for the period October 2014 to March 2015.

In conclusion, the Tribunal partially allowed the appeal and partially remanded the matter, emphasizing the importance of interpreting taxation laws in light of existing legal principles and precedents to ensure fair and just outcomes in tax disputes.