2007 (8) TMI 298 - AT - Service Tax

Extended Period for Service Tax Notice Upheld, Appeal Allowed on Limitation Grounds

PT EDUCATION & TRAINING SERVICE LTD. Versus COMMR. OF C. EX., VADODARA-I

PT EDUCATION & TRAINING SERVICE LTD. Versus COMMR. OF C. EX., VADODARA-I - 2008 (12) S.T.R. 582 (Tri. - Ahmd.) , [2009] 20 STT 519 (AHD. - CESTAT) Issues:1. Dispute regarding payment of service tax on advance fees collected by the appellant.2. Contention of the appellant regarding the limitation period for the show cause notice.Analysis:1. The dispute in the present appeal revolves around the payment of service tax on advance fees collected by the appellant, a provider of commercial coaching training services. Initially, a Board's Circular stated that fees collected before 1.7.03 for services post that date would not be taxable. However, a subsequent Circular clarified that such amounts would be liable to service tax since the services were provided after 1.7.03. The appellant argued that the show cause notice issued on 28.12.04 was time-barred. The Commissioner (Appeals) noted that the appellant did not disclose advance fees collection for services post 1.7.03 in the ST-3 return filed in October 2003. Despite reminders and requests for payment, the appellant did not comply. The Department issued summons, and only after that did the appellant provide the relevant information. The Commissioner concluded that the extended period was justified due to deliberate suppression of facts by the appellant. The Tribunal upheld this decision, emphasizing that the appellant's failure to disclose information prevented the timely issuance of the show cause notice within the normal time limit. The Tribunal found the appellant's arguments based on other judgments not applicable to the case, as the relevant information was provided late, justifying the extended period.2. The appellant's correspondence with the Revenue revealed that the Revenue was aware of the advance fees collection and the tax amount involved. The Superintendent's letter highlighted the amount due and the appellant's acceptance of the correctness of the tax calculation. Despite the appellant's arguments against paying service tax on fees collected before 1.7.03, the Superintendent's quantification was acknowledged by the appellant. The Tribunal noted that since the Revenue had knowledge of the advance fees collection and the tax amount, the extended period of limitation was not applicable. As the Revenue was informed and had calculated the tax amount, the notice invoking the extended period was deemed time-barred. Consequently, the appeal was allowed solely on the ground of limitation, without delving into the case's merits.