2023 (4) TMI 435 - AT - Service Tax

Levy of Service tax - business support service (BSS) - online information and database access or retrieval service (OIDARS) - fees received by the appellant from banks/financial institutions for registration of transactions of securitization, asset reconstruction and security deposits - it is contended that service tax cannot be proposed and confirmed under two different heads of service for one single activity - extended period of limitation. Extended Period of Limitation - wilful suppression of facts with an intent to evade payment of service tax, or not - appellant is Government company - rebuttal of presumption - HELD THAT - It is correct that section 73 (1) of the Finance Act does not mention that suppression of facts has to be wilful since wilful precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression wilful before suppression of facts under section 73(1) of the Finance Act, suppression of facts has still to be willful and with an intent to evade payment of service tax. The Supreme Court and the Delhi High Court have held that suppression of facts has to be wilful and there should also be an intent to evade payment of service tax. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY 1995 (3) TMI 100 - SUPREME COURT , the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since suppression of facts has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. This issue was examined by a Division Bench of the Tribunal in M/S. KRISHI UPAJ MANDI SAMITI AND OTHERS VERSUS CCE ST, JAIPUR I JAIPUR II 2017 (5) TMI 1465 - CESTAT NEW DELHI . It was held that since Krishi Upaj Mandi Samiti was a government organisation and its functions were regulated by the Act and the Rules made thereunder, there will be a rebuttable presumption regarding non-existence of any of the ingredients mentioned in the proviso to section 73(1) of the Finance Act. The show cause notice merely alleges that by not disclosing the entire facts in the ST3 returns, the assessee had an intention to evade payment of service tax and this is what has also been recorded by the Commissioner while adjudicating the show cause. The appellant is a government company and, therefore, there is a rebuttable presumption regarding non-existence of any of the ingredients mentioned in the proviso to section 73(1) of the Finance Act. The show cause notice does not rebut the presumption - In such circumstances, the extended period of limitation could not have been invoked. As the entire demand that has been confirmed is for the extended period of limitation, the order confirming the demand cannot be sustained. Demand of service tax on the fees received from banks/financial institutions for registration of transactions under the category of BSS and also OIDARS - HELD THAT - A Division Bench of the Tribunal in M/S ESS GEE REAL ESTATE DEVELOPERS PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE 2019 (6) TMI 633 - CESTAT NEW DELHI , after placing reliance upon the decision of the Tribunal in M/S. CMS (INDIA) OPERATIONS MAINTENANCE CO. (P) LTD. VERSUS CCE, PUDUCHERRY 2017 (2) TMI 65 - CESTAT CHENNAI , observed that It is very difficult to really cull out from the show cause notice as to which particular category of service was intended to be taxed. The show cause notice should have clearly indicated whether the service of real estate agent or site formation was leviable to tax, for this is the requirement of section 65A of the Act. This confusion is maintained in the impugned order. T he impugned order cannot be sustained - Appeal allowed.

Summary

Issues Involved:

1. Demand of service tax under two different categories for one single activity.
2. Invocation of the extended period of limitation under section 73 of the Finance Act, 1994.

Summary:

Demand of Service Tax under Two Different Categories:

The appellant, M/s. Central Registry of Securitisation, Asset Reconstruction and Security Interest of India, challenged the order confirming the demand of service tax on fees received from banks/financial institutions for registration of transactions under the categories of 'business support service' (BSS) and 'online information and database access or retrieval service' (OIDARS). The appellant argued that service tax cannot be proposed and confirmed under two different heads for one single activity. The Tribunal referenced the case of Ess Gee Real Estate Developers Pvt. Ltd. vs. Commr. of C. Ex., Jaipur, which established that a show cause notice should clearly indicate the specific category of service intended to be taxed. Consequently, the Tribunal found the impugned order unsustainable on this ground.

Extended Period of Limitation:

The appellant contended that the extended period of limitation under the proviso to section 73(1) of the Finance Act could not be invoked as there was no wilful suppression of facts with an intent to evade payment of service tax. The Tribunal examined section 73 and relevant case law, including Pushpam Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay and Bharat Hotels Limited vs. Commissioner of Central Excise, which clarified that suppression of facts must be deliberate and with intent to evade payment of duty. The Tribunal noted that the appellant, being a government company, benefits from a rebuttable presumption of non-existence of such intent. The show cause notice and the Commissioner's order failed to rebut this presumption. Therefore, the Tribunal held that the extended period of limitation could not be invoked, rendering the entire demand unsustainable.

Conclusion:

The Tribunal set aside the order dated 22.05.2017 passed by the Commissioner, Service Tax, Delhi-III Commissionerate, and allowed the appeal on both grounds. The demand of service tax under two different categories for one single activity was deemed improper, and the invocation of the extended period of limitation was found unjustified.