2023 (1) TMI 932 - AT - Service Tax

Extended period of limitation - Classification of services - Clearing and Forwarding Agent services or not - working as a consignment agent of various oil manufacturers and had been receiving commission for such services - demand alongwith interest and penalties - HELD THAT - The period of dispute is 2006-2007 to 2008-2009 and the show cause notice was issued on 12.04.2011. During the relevant period, the normal period of limitation was one year. The show cause notice was issued clearly beyond the period of one year and the proviso to section 73 (1) was involved - As may be seen, the demand could only be raised within a period of one year from the date unless the short payment of service tax was by reasons of (a) fraud or (b) collusion or (c) wilful mis-statement or (d) suppression of facts or (e) contravention of any of the provisions of Chapter V of the Finance Act or the rules made thereunder with intent to evade payment of service tax. The detection of any escapement of service tax during audit is not a ground on which extended period of limitation as per section 73. Neither does the fact that the audit was conducted prove that the appellant suppressed, let alone willfully suppressed taxable services. On this ground itself, the demand invoking the extended period of limitation needs to be set aside. As may be seen, if the assessee fails to furnish the returns or having made a return fails to assess the tax in accordance with the provisions of law, the Central Excise officer may require the assessee to produce such accounts, documents or other evidence as he may deem necessary and determine the same payable by the assessee or refundable to the assessee on the basis of such assessments. This is the responsibility of the Jurisdictional Superintendent of Central Excise with whom the return is filed. In this case, the entire basis on which the audit raised the objection was in the books of accounts and documents of the appellant - If the audit detected escapement of service tax, it does not establish, in the factual matrix of this case, that the assessee has indulged in fraud or collusion or wilful mis-statement or suppression of facts or violation of legal praising with an intent to evade payment of service tax. It only establishes that the officer tasked with the best judgment assessment has not done his job. This cannot be the ground on which extended period of limitation can be invoked. The entire demand is time barred - Appeal allowed.

Summary

Issues:
1. Service tax liability on transport services and storage charges.
2. Dispute regarding classification under "Clearing and Forwarding Agent" service.
3. Invocation of extended period of limitation for demand and penalties.

Analysis:

Issue 1: Service tax liability on transport services and storage charges
The appellant, a transport service provider, was audited, revealing commission income as a consignment agent and additional charges. The Department classified these services under "Clearing and Forwarding Agent" service, demanding service tax for 2006-2009, including storage charges. The appellant contested the demand, acknowledging storage charges but disputing the classification.

Issue 2: Dispute regarding classification under "Clearing and Forwarding Agent" service
The appellant argued that as a consignment agent, they did not fall under the Clearing and Forwarding Agent category, citing case laws. They emphasized not handling goods directly, acting on principal's instructions. The Department upheld the demand, asserting the appellant's liability under the specified service category.

Issue 3: Invocation of extended period of limitation for demand and penalties
The Department invoked the extended period of limitation, alleging willful suppression of taxable services during audit. However, the Tribunal found no evidence of fraud, collusion, or willful misstatement to justify the extended period. The audit's detection of non-payment did not establish intent to evade tax. The Tribunal ruled the demand as time-barred, setting aside the impugned order and penalties.

In conclusion, the Tribunal allowed the appeal, emphasizing the lack of grounds to invoke the extended period of limitation. The decision highlighted the importance of meeting legal criteria for demanding service tax and penalties, ultimately ruling in favor of the appellant due to the time-barred nature of the demand.