2015 (11) TMI 1482 - AT - Service Tax

Tribunal dismisses Revenue's appeal on service tax demand due to lack of evidence & time-barred notice

The Tribunal dismissed the Revenue's appeal against the Order-in-Appeal confirming a service tax demand for non-payment on advance received before ... Demand of service tax - Commercial training or coaching service - Bar of limitation - Held that:- Regarding the contention of Revenue that the Respondent did not include the advance received in the month of May and June, 2003 in its ST-3 returns for April ,2003 to September 2003 which proved suppression on its part, it needs to be mentioned that service became taxable from 1.7.2003 and so it is rather unreasonable to require (or expect from) the respondent to file ST-3 return from April, 2003 onwards. We find that the Commissioner (Appeals) has discussed the issue at length. We are in agreement with Commissioner (Appeals) regarding non invokability of extended period of limitation in this case, As the show cause notice was issued on 2.7.2006, the entire demand is beyond the normal period of one year and is therefore fatally hit by time-bar - impugned demand sustainable - Decided against Revenue. Issues:Appeal against Order-in-Appeal confirming service tax demand under commercial training or coaching service for non-payment of tax on advance received before service became taxable. Applicability of CBEC circular and Rule 6(1) of Service Tax Rules, 1994. Invocation of extended period due to suppression of information. Non-appearance of respondent during hearing.Analysis:The appeal was filed by the Revenue against the Order-in-Appeal dated 31.3.2009, which had set aside the Order-in-Original dated 28.5.2008 confirming a service tax demand of Rs. 99,406/- along with interest and penalty under the category of commercial training or coaching service. The dispute arose because the appellant did not pay service tax on the amount received in advance from service recipients during May and June 2003, even though the service became taxable from 1.7.2003.The Revenue contended that as per CBEC circular No.65/14/2003 and Rule 6(1) of the Service Tax Rules, 1994, service tax should have been paid on the value of services received in advance, which could have been calculated on a prorata basis. The respondent failed to pay the service tax on the advance received and also suppressed information regarding the value of services received in advance, justifying the invocation of the extended period for tax recovery.Despite the timely issuance of a hearing notice, nobody appeared on behalf of the respondent, and no request for an adjournment was received. The Tribunal considered the Revenue's arguments and reviewed the cross objections filed by the respondent. It was acknowledged that the service tax demand was made for the amounts received in May and June 2003, even though the service became taxable only from 1.7.2003. The Tribunal noted the significance of CBEC's clarificatory circular and the subsequent amendment to Rule 6(1) of the Service Tax Rules in 2004.The Tribunal found that the respondent's belief regarding the non-taxability of the advance received before the service became taxable was reasonable, especially in the absence of evidence proving willful suppression of facts. The Tribunal also agreed with the Commissioner (Appeals) that the extended period of limitation could not be invoked in this case, as the show cause notice was issued beyond the normal one-year period, rendering the demand time-barred.Ultimately, the Tribunal concluded that the impugned demand was not sustainable, leading to the dismissal of the appeal and disposal of the cross objections. The decision was based on the lack of evidence supporting willful suppression and the time-barred nature of the demand due to the delayed issuance of the show cause notice.