2009 (3) TMI 43 - AT - Service Tax

Appellate Tribunal CESTAT Chennai Overturns Penalty for Service Tax Dispute

The Appellate Tribunal CESTAT, Chennai set aside the penalty imposed on the appellants for service tax levy of Rs.3,12,470 as there was no suppression. ... Inclusion of salaries/wages in taxable value of security services - limitation bar to recovery of service tax - absence of suppression disentitling revenue to extended limitation - penalty for suppressionInclusion of salaries/wages in taxable value of security services - Whether salaries/wages paid to security personnel are includible in the value of taxable security services - HELD THAT: - The Tribunal observed that on merits the question of including salaries/wages of security personnel in the taxable value is settled against the assessee by earlier Tribunal authority. The present order records that the legal position on merits does not favour the appellants, citing the precedent identified by the Tribunal. No fresh contrary legal conclusion was reached by the Bench; the findings on merits were acknowledged as settled against the assessee.Merits on includibility acknowledged as settled against the assessee by existing Tribunal precedent.Limitation bar to recovery of service tax - absence of suppression disentitling revenue to extended limitation - penalty for suppression - Whether the demand for service tax can be sustained notwithstanding the limitation period where there was no suppression by the assessee - HELD THAT: - The Commissioner (Appeals) had set aside the penalty on the ground that there was no suppression by the appellants. The Tribunal held that once a finding of no suppression is recorded, the Revenue cannot invoke extended limitation to sustain the tax demand. Applying that conclusion, the Tribunal found the demand to be barred by limitation and therefore unsustainable, notwithstanding the adverse position on merits. Consequently the impugned order was set aside insofar as it related to the demand of service tax. The penalty had already been set aside by the Commissioner (Appeals) on the finding of no suppression.Demand set aside as barred by limitation due to recorded absence of suppression; penalty previously set aside is left undisturbed.Final Conclusion: Although the Tribunal acknowledged that the legal position on includibility of wages in the taxable value is against the assessee, the appeal is allowed insofar as the tax demand is set aside because it is barred by limitation in view of the recorded absence of suppression; the penalty had already been quashed by the Commissioner (Appeals). The Appellate Tribunal CESTAT, Chennai set aside the penalty imposed on the appellants for service tax levy of Rs.3,12,470 as there was no suppression. The dispute was regarding inclusion of salaries/wages paid to security personnel for service tax liability computation. The demand was found barred by limitation, and the appeal was allowed.