Security Service Provider Liable for Service Tax in Normal Period; No Penalty for Non-Suppression of Info.

The CESTAT Kolkata held that the Appellant, a security service provider, was liable to pay service tax for the normal period of limitation on services provided to Government agencies. However, the extended period for demanding service tax was deemed inapplicable as the Appellant did not suppress information. Consequently, the demands confirmed in the impugned order were not sustainable. The Appellant was directed to pay any service tax due, along with interest, for the normal period, without any penalty. The appeal was disposed of on 19.12.2023.

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Issues:
The issues involved in the judgment are the Service Tax demand upheld by the Commissioner of Central Excise, the Appellant's submission regarding registration and regular payment of service tax, the contention on the demand being barred by limitation, and the applicability of the extended period for demanding service tax.

Service Tax Demand Upheld:
The appeal was filed against the Order-in-Appeal upholding the Service Tax demand of Rs.13,53,077/- along with interest and penalty confirmed by the adjudicating authority. The Appellant, a security service provider, was issued a show cause notice for service tax not paid for the period 2001-02 to 2003-04. The Joint Commissioner confirmed the demand, which was upheld on appeal. The Appellant challenged this order in the present appeal.

Registration and Payment of Service Tax:
The Appellant contended that they have been registered with the Service Tax department since 14.09.2000 and have been regularly paying service tax. They claimed to have filed returns on the taxable value received by them and provided security services mainly to Government agencies. Despite some agencies refusing to pay service tax, the Appellant maintained they promptly deposited the collected tax in the Government account. They argued that the demand was unjustified as they did not suppress any information and the extended period for demanding service tax was not applicable.

Barred by Limitation and Extended Period:
The Appellant asserted that the entire demand was barred by limitation since the show cause notice was issued on 11.11.2005 for the period 2001-02 to 2003-04. They argued that as they did not suppress any information and the extended period could not be invoked, the demands confirmed in the impugned order were not sustainable on the ground of limitation. The Appellant was found liable to pay service tax for the normal period of limitation without any penalty due to the absence of intent to evade tax payment.

Conclusion:
The CESTAT Kolkata observed that the Appellant, despite being registered and paying service tax regularly, was liable to pay service tax on the taxable services provided to Government agencies. However, as the Appellant did not suppress any information and the extended period was deemed inapplicable, the demands confirmed in the impugned order were not sustainable. The Appellant was directed to pay service tax, if any, along with interest for the normal period of limitation, with no penalty imposed. The appeal was disposed of accordingly on 19.12.2023.

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