2023 (3) TMI 379 - AT - Service Tax

Levy of Service Tax - Technical Testing and Analysis (TTA) services or mining services - service tax for the period 10.9.2004 to 31.3.2008 demanded under TTA services but assessee paid tax under mining services - it is the submission of the learned counsel that once it is undisputed that from 1.6.2007, the services rendered by the appellant fall under mining services , they cannot be classified under any other category prior to that date - time limitation - suppression of facts or not - HELD THAT - It is undisputed that the appellant provides wireline logging, perforation and data processing services to ONGC and OIL. The appellant has been paying service tax on these three services from 1.6.2007 under the head mining services and the department has not disputed this classification of the service. Once the department accepted that these are mining services , it cannot, simultaneously, classify them under TTA services. Unless the department can establish that the appellant was wrong in classifying these services under mining services and the department itself was equally wrong in accepting their classification under mining services , the department cannot classify the services under any other head, including TTA - it is not found in the impugned order explaining why the department and the appellant were both wrong in classifying them as mining services . Therefore, the demand cannot be sustained on merits. Time Limitation - HELD THAT - The scheme in Finance Act, 1994 is that if the assessee does not self-assess tax correctly, the remedy against it is the Best Judgment Assessment under section 72. This provision is similar to the provision for re-assessment under Section 17 (4) of the Customs Act, 1962. The Commissioner imagined that wrong self-assessment by an assessee would amount to deliberate mis-declaration and suppression of facts with intent to evade. As per the Finance Act, 1994, if the assessee wrongly self-assesses tax in its returns and none of the five elements required to invoke extended period of limitation is present and if the demand gets time-barred, the responsibility for it rest squarely on the officer who had the jurisdiction and the mandate to the Best Judgment assessment under section 72 but has not done so and NOT on the assessee. Therefore, the invocation of the extended period of limitation cannot be sustained. Demand of interest and penalties - HELD THAT - The demand of interest and penalties also deserve to be set aside as it is held in favour of the appellant both on merits and on limitation. Appeal allowed.

Summary

Issues:
1. Classification of services provided by the appellant under the category of technical testing and analysis (TTA) or mining services.
2. Invocation of extended period of limitation for demanding service tax.
3. Validity of interest and penalties imposed.

Classification of Services:
The appellant, a service provider, offers wireline logging, perforation, and data processing services to ONGC and OIL. The appellant started paying service tax under the category of mining services from 1.6.2007, and the department did not object to this classification. The Tribunal held that once the department accepted these services as mining services, they could not be classified under TTA. The demand was not sustainable on merits as the department failed to prove the misclassification by the appellant.

Extended Period of Limitation:
The Tribunal analyzed the invocation of the extended period of limitation under Section 73. The demand can only be raised under specific conditions like fraud, collusion, wilful misstatement, suppression of facts, or violation of the Act to evade service tax payment. The Tribunal criticized the Commissioner's proposition in the Show Cause Notice (SCN) for deeming incorrect self-assessment as deliberate misdeclaration. The Tribunal clarified that incorrect self-assessment by the assessee does not automatically imply suppression of facts. The Tribunal emphasized that the responsibility for correct assessment lies with the Central Excise officer, and the invocation of extended limitation based on self-assessment alone was not valid.

Interest and Penalties Imposed:
The Tribunal ruled in favor of the appellant on both merits and limitation issues, leading to the setting aside of the demand for interest and penalties. The Tribunal concluded that since the demand itself was not sustainable, the imposition of interest and penalties could not be upheld. The appeal was allowed, providing consequential relief to the appellant.

This detailed analysis of the judgment highlights the key issues of classification of services, the validity of the extended period of limitation, and the imposition of interest and penalties. The Tribunal's decision centered on the lack of merit in the demand due to the department's acceptance of the services under mining services and the incorrect invocation of the extended period of limitation based on self-assessment.