Tax Tribunal upholds respondent's compliance, dismisses appeal on time-barred demand.

The Tribunal dismissed the department's appeal, finding the demand time-barred due to the respondent's cooperation with audit objections, timely payment of service tax, and lack of intention to evade payment. The respondent's eligibility for abatement under notification No.12/2003 was upheld based on the use of materials for cleaning services. The inclusion of the TDS component in the taxable value of services was rectified promptly after audits, demonstrating compliance. The Tribunal highlighted the respondent's cooperation and compliance, leading to the appeal's dismissal.

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Issues:
1. Time limitation for issuing show cause notice.
2. Eligibility for abatement under notification No.12/2003.
3. Inclusion of TDS component in the taxable value of service.

Issue 1 - Time limitation:
The department appealed against the Commissioner (Appeals) decision to set aside the demand based on interest and penalties, arguing that the show cause notice period was not time-barred. The department contended that even though audits were conducted, the department cannot be imputed with knowledge of non-payment of service tax. The respondent argued that they had paid the service tax and interest raised in audit objections promptly, indicating no suppression of facts. The Tribunal noted that three audits were conducted, and objections were promptly addressed by the respondent, establishing no intention to evade payment. The Tribunal found the demand to be time-barred, citing relevant case laws and the respondent's cooperation with the department.

Issue 2 - Eligibility for abatement:
The department claimed that the respondent wrongly availed abatement under notification No.12/2003 for cleaning services. The Commissioner (Appeals) held that since materials were used for providing cleaning services, the respondent was eligible for abatement. However, the department argued that abatement eligibility required proof of VAT payment on the materials sold, which was not applicable in this case. The respondent's consultant highlighted that the abatement was availed in good faith and promptly paid service tax on audit objections, indicating compliance and lack of intention to evade payment.

Issue 3 - Inclusion of TDS component:
The department alleged that the respondent did not include the TDS component in the taxable value of services. The respondent argued that they rectified this error after it was pointed out in audits, demonstrating cooperation and compliance with audit objections. The Tribunal considered the respondent's actions in addressing audit objections promptly and found no grounds to interfere with the Commissioner (Appeals) decision, ultimately dismissing the appeal.

The Tribunal emphasized the respondent's cooperation with audit objections, timely payment of service tax, and lack of intention to evade payment, leading to the dismissal of the appeal based on the issues of time limitation, eligibility for abatement, and inclusion of TDS component in the taxable value of services.

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