2021 (9) TMI 897 - AT - Service Tax

Recovery of Service Tax - air travel agent services - services provided to the US Embassy - non-fulfillment of the conditions laid down in the said Notifications dated 23.05.2007 till 30.06.2012 and Notification dated 20.06.2012 - rule 5A of the Service Tax Rules, 1994 - amendment in changed address in the Registration Certificate as per the provisions of Act - extended period of limitation - liability of interest and penalty - HELD THAT - The Exemption Notifications was issued by the Central Government of India in the public interest to exempt taxable services provided to a foreign diplomatic mission or consular post in India. As is evident from clause (i) of both the Notifications, the underlying purpose is to uphold the principle of reciprocity amongst the nations. It is only to ensure that there is no evasion of tax and that services have been rendered specifically to those diplomatic missions/ consular officers to whom a certificate has been issued by the Protocol Officer that the Notifications require a correlation to be established between the invoices and the undertakings. Once these two documents can be correlated, though not in a manner provided for, the substantive conditions to the Exemption Notifications stand fulfilled and the exemption cannot be denied. In the present case, the appellant was able to correlate the invoices with the undertakings. It can, therefore, be concluded that the appellant satisfied the substantial conditions set out in the Exemption Notifications - It needs to be noted that even for the subsequent period, the appellant continued to provide such services to the US Embassy and the exemption has been allowed. Extended period of limitation - HELD THAT - The period of dispute in the present appeal is from 01.10.2008 to 31.03.2013. The show cause notice was issued on 16.04.2014 - the appellant had in the ST-3 returns clearly mentioned about availing the benefit of the Exemption Notifications. The Department cannot, therefore, contend that the appellant had suppressed any fact, much less with an intent to evade payment of service tax - It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when suppression or collusion is wilful with an intent to evade payment of duty. The invocation of the extended period of limitation, therefore, cannot be sustained. It would not be necessary to examine the contention advanced by learned counsel for the appellant that impugned order has gone beyond the allegations made in the show cause notice - Appeal allowed.

Issues Involved:
1. Eligibility for exemption under Notification No. 33/2007-ST and Notification No. 27/2012-ST.
2. Compliance with the requirement to amend the address in the Registration Certificate.
3. Invocation of the extended time period.
4. Liability for payment of interest and penalty.

Detailed Analysis:

Issue 1: Eligibility for Exemption
The Principal Commissioner found that the appellant did not fulfill the conditions laid down in the Exemption Notifications. Specifically, the appellant did not mention the running serial numbers and the date of undertakings on invoices, and the undertakings issued by the US Embassy were not properly formatted. The appellant argued that they had satisfied the conditions specified in the Exemption Notifications and provided authenticated certificates and original undertakings from the US Embassy. The Tribunal accepted the appellant's submission that the certificates were authenticated and the undertakings, though not in the proper format, were sufficient to meet the substantive requirements of the Notifications. The Tribunal concluded that the appellant satisfied the substantial conditions set out in the Exemption Notifications and was eligible for the exemption.

Issue 2: Compliance with Registration Certificate Requirements
The Principal Commissioner found that the appellant had not provided documentary proof regarding the fulfillment of the Service Tax Rules, 1994, as the appellant had not got the addresses amended and continued doing business from the Noida address without a valid registration certificate. This issue was not elaborated upon further in the Tribunal's decision, as the primary focus was on the eligibility for exemption and the invocation of the extended time period.

Issue 3: Invocation of Extended Time Period
The Principal Commissioner invoked the extended period of limitation under the proviso to section 73(1) of the Finance Act, alleging that the appellant had knowingly violated the provisions of the Exemption Notifications to evade service tax. The appellant argued that there was no mala fide intent and that details about availing the benefit under the Exemption Notifications were duly declared in the ST-3 returns. The Tribunal accepted this submission, noting that the Department was aware of the appellant's claim for exemption and that there was no element of suppression or mala fide intent. The Tribunal cited various judicial precedents to support the view that suppression of facts must be deliberate and with an intent to evade payment of duty. Consequently, the invocation of the extended period of limitation was not justified.

Issue 4: Liability for Interest and Penalty
The Principal Commissioner found that once the service tax liability was confirmed, interest and penal provisions had to follow. However, since the Tribunal concluded that the appellant was eligible for the exemption and that the extended period of limitation could not be invoked, the liability for interest and penalty did not arise.

Conclusion:
The Tribunal set aside the impugned order dated 30.09.2015 passed by the Principal Commissioner, finding that the appellant was eligible for the exemption under the relevant Notifications and that the extended period of limitation could not be invoked. The appeal was allowed, and the demand for service tax, interest, and penalty was quashed.

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