2023 (6) TMI 470 - AT - Service Tax

Invocation of Extended period of Limitation - quantum of duty confirmed - penalty imposed - Business Auxiliary Service - non-payment of service tax - HELD THAT - The appellants have deposited the applicable service tax and in case of Lakshay International 25% of the penalty was also deposited - the authorities below have accepted the contention of the appellants regarding the non-applicability of service tax to the appellants before 18.04.2006. While the appellant s claim that the extended period is not invokable as the issue involves interpretation of law the claim of the Revenue is that the appellants having not registered themselves; having not paid applicable service tax have suppressed material facts before the Department. The appellants are not contesting the applicability of service tax to them. However they dispute the invocation of extended period; quantum of duty confirmed and penalty imposed. Under these circumstances and in view of the facts of the case it is found that the extended period is rightly invoked relying on M/S VIDARBHA CRICKET ASSOCIATION VERSUS COMMISSIONER OF CENTRAL EXCISE 2014 (1) TMI 204 - CESTAT MUMBAI (LB) and SHREE GURUKRUPA CONSTRUCTION COMPANY VERSUS COMMISSIONER OF CENTRAL EXCISE ST RAJKOT 2019 (8) TMI 323 - CESTAT AHMEDABAD - Coming to the quantification of the duty it is found that the appellants have produced Chartered Accountant certificates regarding the commissions paid to overseas agents for the period before and after 18.04.2006 - the lower authorities have simply relied on the figures proposed in the show cause notice and have not discussed at all the Chartered Accountant certificates. They have not also contradicted the said certificates. The certificates given by Experts in the respective fields cannot be ignored without cogent reasons. Therefore the duty has been correctly paid by the appellants. The appellants have taken the plea that in the case of G.D. Tools and Forgings applicable service tax has been paid along with interest before the issuance of show cause notice; in case of Lakshay International service tax along with interest and in addition25% of the penalty has been paid. Therefore the appellants have made out a case under the provisions of Section 73and Section 80 of the Finance Act 1994. Accordingly there are no penalties can be sustained on the appellants. Coming to the plea of the appellants that they would be eligible for CENVAT credit of the service tax paid by them we find that as submitted by the learned Authorized Representative the issue is not before us in the present proceedings. Therefore we refrain from offering any findings on the same. Duty demand is restricted to the amount already deposited by the appellants along with interest - All penalties are however set aside - appeal allowed in part.

Summary

Issues involved:
The issues involved in the judgment are the applicability of service tax on commission agents located outside India, imposition of penalties under Sections 76, 77, and 78, invocation of extended period of limitation, and eligibility for CENVAT credit.

M/s Lakshya International Private Limited (ST/537/2011):
The Department contended that the appellants were rendering "Business Auxiliary Service" as commission agents located outside India, making them liable to pay service tax under Reverse Charge Mechanism. The Deputy Commissioner confirmed the service tax demand, leading to an appeal. The Commissioner (Appeals) set aside part of the demand, confirmed service tax for a specific period, and imposed penalties under Sections 77 and 78. The appellant argued against the imposition of penalties citing relevant case laws and challenged the invocation of the extended period of limitation. The Tribunal found that the appellants had paid the applicable service tax and upheld the contention regarding non-applicability of service tax before a certain date. The Tribunal also noted the arguments put forth by both parties regarding penalty imposition and extended period, ultimately setting aside all penalties.

M/s G.D. Tools and Forgings (ST/538/2011):
A show cause notice was issued seeking to confirm service tax demand, interest, and penalties. The Original Authority set aside part of the demand, confirmed service tax for a specific period, and imposed penalties under Sections 76, 77, and 78. The Commissioner (Appeals) modified the demand and penalties. The appellant argued that applicable service tax had been paid before the notice was issued. The Tribunal considered the arguments presented by both sides, including the invocation of the extended period of limitation, and found that the appellants had paid the service tax. Consequently, all penalties were set aside.

Conclusion:
Both appeals were partly allowed, restricting duty demand to the amount already deposited by the appellants along with interest. All penalties were set aside, and the Tribunal refrained from offering findings on the eligibility for CENVAT credit.