2024 (4) TMI 1063 - AT - Service Tax

Extended period of Limitation - Classification of services - Business Auxiliary Services or not - payment of commission to foreign agent during the year 2008-09 and 2009-10 towards trading of petroleum products and booked expenditure in their books of account - revenue neutrality - HELD THAT - The extended period of limitation can be invoked only when there is suppression of facts willful mis-statement and collusion with intent to evade the payment of tax. The extended period of limitation can be invoked only on these grounds which are specifically provided under the statute. If the department seeks to invoke the extended period of limitation on grounds other than those mentioned in statute then such an invocation of extended period of limitation is bad in law. In this case there was no deliberate intention on the part of the appellant in either not disclosing correct information or to evade the payment of any tax. There is no positive Act was found on the part of the appellant to evade the payment of any service tax nor has any proof towards this been adduced by the revenue. A mere omission will not cause to suppression of fact and as the appellant was of bona fide belief that no service tax was liable to be paid in relation to payment made to foreign agent categorized under Business Auxiliary Service . Therefore the longer period of limitation cannot be invoked in the fact of the present case - there are no act of the appellant which prescribed under Proviso to Section 73(1) of the Finance Act such as suppression of fact willful mis-statement collusion with intent to evade payment of tax. Therefore the demand being under extended period cannot be sustained. Revenue Neutrality - HELD THAT - The entire situation is revenue neutral and there is no loss of the revenue. For this reason also there is no mala fide intention on the part of the appellant. Hence the extended period is not invokable. The impugned order is set aside - appeal allowed.

Summary

Issues:
The issues involved in this case include the liability of service tax on commission paid to a foreign agent for trading petroleum products and the service tax liability on Technical Testing and Analysis services received by the appellant.

Commission Paid to Foreign Agent:
The appellant, engaged in providing taxable services, paid a commission to their foreign agent for trading petroleum products. The commission fell under the category of 'Business Auxiliary Services' and was classified under sub clause (zzb) of clause 105 of Section 65 of the Finance Act, 1994, making it liable for service tax. The appellant contended that since the service was performed abroad in connection with the supply of goods outside India, it should not be subject to service tax in India. The appellant argued that they had not paid service tax on the belief that services performed outside India were not taxable. The Tribunal found that there was no deliberate intention to evade service tax, and as the appellant was registered with the Service Tax department and the transactions were recorded in their books, the demand for service tax under the extended period was not sustainable on limitation grounds.

Technical Testing and Analysis Services:
The appellant also received Technical Testing and Analysis services, for which a service tax liability of Rs. 26,193/- was determined. The appellant argued that they had not paid service tax on these services based on a bona fide belief that services performed outside India were not taxable. The Tribunal found that there was no suppression of facts on the part of the appellant and that the extended period of limitation could not be invoked as there was no evidence of deliberate intention to evade tax. The Tribunal held that the demand for service tax on these services was not sustainable on limitation grounds.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal and ruling in favor of the appellant. The Tribunal found that the demand for service tax on both the commission paid to the foreign agent and the Technical Testing and Analysis services was not sustainable on limitation grounds, as there was no evidence of deliberate intention to evade tax. The appellant's registration with the Service Tax department, recording of transactions, and lack of suppression of facts supported the decision to set aside the demand for service tax.