Tribunal overturns penalty for service tax non-payment due to lack of evidence

The tribunal set aside the penalty imposed on the appellant for non-payment of service tax on 'Rent-A-Cab Scheme Operator Service' from 2007-08 to 2010-11, citing lack of evidence of wilful default. It was held that the extended period for limitation grounds was not justified as there was no fraud or suppression of facts. The case was remanded to the original adjudicating authority to determine the service tax liability within the normal limitation period of one year from the Show Cause Notice date.

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Issues:
Non-payment of service tax on 'Rent-A-Cab Scheme Operator Service' from 2007-08 to 2010-11; invocation of extended period in Show Cause Notice for demand confirmation; imposition of penalty under Sections 76, 77, and 78 of the Finance Act, 1994; applicability of limitation period for service tax liability confirmation.

Analysis:
The case involved a dispute regarding the non-payment of service tax by the appellant on the 'Rent-A-Cab Scheme Operator Service' provided during the period from 2007-08 to 2010-11. The service tax Department confirmed a demand of Rs. 28,10,840/- along with interest and penalty based on the definition of taxable service. The Commissioner (Appeals) later reduced the service tax liability to Rs. 5,22,616/- and waived the penalty imposed under Sections 76, 77, and 78 of the Finance Act, 1994.

The appellant contended that the extended period mentioned in the Show Cause Notice should not apply for demand confirmation as there was no evidence of fraud, collusion, or suppression of facts to defraud the government revenue. The Commissioner (Appeals) found no wilful default on the part of the appellant in non-payment of service tax and set aside the penalty, citing inadvertent non-payment and lack of evidence for wilful misstatement or suppression of facts.

The tribunal noted that since the penalty was dropped due to the absence of wilful default in non-payment of service tax, invoking the extended period for limitation grounds was not justified. The tribunal opined that the ingredients for invoking the extended period were common in both the proviso to Section 73 and Section 78 of the Finance Act, 1994. Therefore, the extended period of limitation could not be invoked, and the liability should be determined within the normal limitation period of one year from the date of the Show Cause Notice.

Consequently, the tribunal set aside the impugned order and remanded the matter to the original adjudicating authority to ascertain the normal limitation period and confirm any service tax liability within that period. The appeal was disposed of by way of remand, with the operative portion pronounced in open court.

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