2008 (4) TMI 149 - AT - Service Tax

Tribunal rectifies mistake, reduces penalty, deems corrigendum time-barred. Tax demand upheld due to voluntary payment.

The Tribunal allowed the Appellant's application for rectification of mistake in the Final Order, reducing the penalty amount imposed. The Tribunal held ... Voluntary deposit - payment under protest - appropriation of deposited tax - extended period of limitation - corrigendum to show cause notice beyond scope of original show cause notice - limitation in tax demandCorrigendum to show cause notice beyond scope of original show cause notice - appropriation of deposited tax - extended period of limitation - Effectiveness of the corrigendum invoking the extended period of limitation and seeking recovery where the original show cause notice proposed appropriation of voluntarily deposited tax. - HELD THAT: - The Tribunal found that the original show cause notice dated 15.9.2005 proposed appropriation of the amount of service tax and interest already deposited by the appellant into the Government account. The subsequent corrigendum sought to invoke the extended period of limitation to recover the same amount. The corrigendum was held to be beyond the scope of the original show cause notice and therefore ineffective, since expanding the demand by a corrigendum in a manner not contemplated by the original notice is impermissible. The Tribunal treated the corrigendum as outside the permissible scope of the proceedings initiated by the original show cause notice. [Paras 4]Corrigendum invoking extended limitation and seeking recovery was ineffective as being beyond the scope of the original show cause notice; appropriation proposed in the original notice could not be extended by the corrigendum.Voluntary deposit - payment under protest - limitation in tax demand - Whether the deposit of tax by the appellant was made under protest and whether the demand was barred by limitation. - HELD THAT: - The Tribunal observed that the appellants deposited the tax voluntarily and no material was placed on record to show that the payment was made under protest. In the absence of any proof that the deposit was under protest, the contention that the demand of tax was barred by limitation was not accepted. The finding on limitation was read together with the Tribunal's Final Order dated 14.11.2007 which had considered facts and reduced the penalty; however, the threshold factual conclusion remained that the tax had been voluntarily deposited without protest, precluding the appellants' limitation defence based on payment under protest. [Paras 4, 5]Deposit was voluntary and not under protest; therefore the plea that the demand is barred by limitation is not sustainable.Final Conclusion: The Tribunal held that the appellants had voluntarily deposited the service tax without protest, that the corrigendum attempting to invoke an extended limitation period and expand recovery was beyond the scope of the original show cause notice and ineffective, and accordingly rejected the appellants' contention that the tax demand was barred by limitation; the finding is to be read with the Tribunal's Final Order dated 14.11.2007. Issues:1. Rectification of mistake in the Final Order dated 14.11.2007.2. Validity of the corrigendum to the show cause notice dated 11.5.2006.3. Whether the demand of tax is barred by limitation.Rectification of Mistake in Final Order:The Tribunal, in Final Order No.1654/07-SM (BR) dated 14.11.2007, reduced the penalty amount imposed on the Appellant from Rs.1,57,896/- to Rs.50,000/- and otherwise rejected the appeal. Subsequently, the Appellant filed an application for rectification of mistake in the Final Order. The Tribunal, through Misc. Order No.106/08-SM (BR) dated 28.3.2008, allowed the Miscellaneous Application on the point of limitation. The facts of the case revealed that the Appellant, engaged in security agency services, had voluntarily deposited the service tax amount of Rs. 1,67,896/- after a Central Excise audit.Validity of Corrigendum to Show Cause Notice:The Appellant's Advocate argued that the corrigendum to the show cause notice dated 11.5.2006, alleging suppression of facts to evade tax payment, was time-barred and, thus, the demand of duty was not sustainable. The Advocate relied on a Tribunal decision in the case of Carponix Ltd. Vs. CCE, Bangalore. On the other hand, the Revenue's representative contended that since the Appellant had voluntarily paid the duty without protest, the demand was not time-barred. The Tribunal observed that the corrigendum to the show cause notice, issued beyond the original notice's scope, was impermissible under the law.Demand of Tax Barred by Limitation:After considering the arguments from both sides and examining the records, the Tribunal found that the Appellant had indeed deposited the tax voluntarily without protest. The Tribunal noted that the show cause notice proposed to appropriate the deposited service tax and interest in the Government Account. Therefore, the corrigendum's attempt to recover the amount by invoking an extended period of limitation was deemed ineffective. Consequently, the Tribunal concluded that the demand of tax was not barred by limitation, as claimed by the Appellant's Advocate.In conclusion, the Tribunal upheld the decision that the Appellant's voluntary tax payment without protest rendered the limitation argument unsustainable. The Tribunal's findings on limitation were to be read in conjunction with the Final Order No. 1654 of 2007-SM (BR) dated 14.11.2007.