2024 (10) TMI 822 - AT - Service Tax

Levy of service tax - business auxiliary service - activities carried out by the Appellant by supplying linen/bed rolls to the passengers in AC Coaches of India railway - extended period of limitation - HELD THAT - The activities carried out by the Appellant is falling under the category of Business Auxiliary Service and Appellant is liable to pay service tax. However, as regards invoking of extended period of limitation, on perusal of the Order-in-Original dated 11.07.2011 relied by the Appellant, on very same issue of supplying bedsheets to passengers of Railway, proceedings demanding service tax under Business Auxiliary Services was dropped by the Adjudication Authority in the matter of M/s. Poorvanchal Caterers, Patna. Moreover, as submitted by the Appellant, there is no dispute that no amount towards service tax was received by the Appellant from IRCTC for supply of bed rolls and they have not received any payment from the train passengers to whom such services is provided. Moreover, during investigation, when statement was recorded, the partner of the Appellant categorically stated that they were paying service tax for the other activities and having service Tax registration. However, they have not paid service tax for the amount received from the Railway on the presumption that no Service Tax is liable to be paid by them. Longer period cannot be invoked, when issue involved is interpretation of the complex provision of law and where there is no deliberate attempt to escape from payment of duty. The demand of Service Tax for the extended period and penalty imposed as per impugned orders are set-aside. Matter is remanded to Adjudication Authority to assess the demand of duty for the normal period of dispute prior to date of Show Cause Notice on 04.01.2010 - Appeal allowed in part.

Summary

Issues:
1. Whether the activities of supplying linen/bed rolls to passengers in AC Coaches of Indian railways constitute business auxiliary service and if Service Tax can be demanded using the extended period of limitation.

Analysis:
The appeal revolved around the question of whether the Appellant's provision of bed rolls to passengers in AC Coaches of Indian railways falls under business auxiliary service and if Service Tax can be demanded for the period from 2004-2005 to F.Y. 2007-2008. The Appellant had taken Service Tax registration in 2006 under "Outdoor Catering and Dry Cleaning service" but did not pay service tax on the amount received from Railway Divisions for supplying bed rolls, believing it was not taxable. The Adjudication authority confirmed the service tax and imposed penalties, leading to the appeal.

During the hearing, the Appellant's counsel highlighted a letter from the Ministry of Railway/IRCTC stating that no service tax was payable on the supply of bed rolls. They argued that many suppliers, including M/s. Poorvanchal Caterers, were not paying service tax based on a genuine belief that the service was not taxable. The counsel contended that there was no suppression of facts to invoke the extended period of limitation, citing various legal precedents to support their argument.

The counsel further argued that the extended period of limitation should not apply as there was no deliberate attempt to evade duty, relying on decisions such as M/s Pushpam Pharmaceutical Company vs. CC. They also emphasized that the demand for the normal period should have been raised within a one-year limitation period, which was not adhered to in this case.

In response, the Authorized Representative for the Revenue maintained that the activities of the Appellant were subject to service tax, referencing judgments like M/s. Premier Garment Process Vs. CCE&ST, Chennai. They supported the Adjudication Authority's decision to invoke the extended period of limitation.

The Tribunal found that while the Appellant's activities fell under business auxiliary service, the demand for service tax for the extended period and the penalties imposed were set aside. The matter was remanded to the Adjudication Authority to assess the demand for the normal period before the Show Cause Notice date. Any amount already paid towards duty would be considered, and the appeal was partially allowed with consequential relief as per the law.