2023 (12) TMI 954 - AT - Service Tax

Recovery of service tax alongwith interest - sale and renting of space for advertising purposes from 01.05.2006 onwards - invocation of extended period of limitation. Liability of appellant to pay service tax - HELD THAT - The appellant is a statutory corporation formed under Road Transport Corporation Act, 1950 and is an instrumentality of the State Government and is operating its buses for the convenience of travelling public within and outside the state of Himachal Pradesh. Further, the corporation is not directly engaged in advertising business and does not possess expertise as an advertisement consultant - In order to prove the payment of service tax, the appellant has also placed on record the affidavit of one Mr. Parveen Bansal, Director of M/s Pisces Communications Pvt. Ltd. alongwith the copies of Challan in order to establish the payment of service tax of Rs. 16,19,883/- in the Government Treasury. They have also placed on record the copies of various challans evidencing the payment of service tax by M/s Pisces Communications Pvt. Ltd. Since, the service tax of Rs. 16,19,883/- stands deposited by the agent of the appellant, the same cannot be demanded again from the appellant - the demand of service tax alongwith interest and penalty is not sustainable in law and therefore the same is set aside. Extended period of limitation - HELD THAT - Since the appellant is a State Government Undertaking it cannot be inferred that they had an intention to evade payment of tax - the coordinate bench of the Tribunal in the case of M/S GD GOENKA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX, DELHI SOUTH 2023 (8) TMI 995 - CESTAT NEW DELHI has considered in detail the issue of limitation and what is required to be proved by the Revenue in order to invoke the extended period of limitation to confirm the demand - extended period of limitation cannot be invoked. The impugned order is not sustainable in law on merit as well as on limitation and therefore, the same is set-aside - appeal of the appellant allowed.

Summary

Issues:
The issues involved in the present judgment are whether the appellant is liable to pay service tax on the sale and renting of space for advertising purposes from 01.05.2006 onwards and whether the demand of service tax from the appellant is barred by limitation.

Issue 1: Liability to Pay Service Tax:
The appellant, a state-owned road transport corporation, provided 'Advertisement Services through hoardings' and 'sale of space or time service for advertisement'. The Adjudicating Authority held that the activity of space selling does not fall within the definition of an advertising agency and was not liable for service tax prior to 01.05.2006. The appellant appointed M/s Pisces Communications Pvt. Ltd. to use space in buses starting from 01.09.2006, and the service tax amounting to Rs. 16,19,883/- was deposited by the agent. The Tribunal found that the demand of service tax, interest, and penalty is not sustainable in law and set it aside.

Issue 2: Limitation of Demand:
Considering the limitation aspect, the Tribunal noted that being a State Government Undertaking, it cannot be inferred that the appellant had an intention to evade tax. Referring to a previous case, it was established that the major portion of the demand raised beyond the limitation period cannot be upheld. The Tribunal further held that the substantial demand was barred by limitation as the show cause notice was issued after the relevant period. The Tribunal also cited a case to emphasize that intentional suppression of facts cannot be presumed merely because the appellant disagreed with the audit findings. The Tribunal found in favor of the appellant on the question of limitation, setting aside the impugned order.

Conclusion:
In conclusion, the Tribunal found that the impugned order was not sustainable in law on merit as well as on limitation. Therefore, the order was set aside, and the appeal of the appellant was allowed with consequential relief, if any, as per law.