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of <h1>Appeal success on time-barred Service Tax demand highlights importance of limitation periods and regulatory guidance.</h1> <h3>M/s. Hem Finlease Pvt. Ltd. Versus CCE, Jaipur-I</h3> M/s. Hem Finlease Pvt. Ltd. Versus CCE, Jaipur-I - TMI Issues:1. Bar on limitation period for proceedings initiation.2. Taxability of transaction fee under 'forward contract service'.Analysis:Issue 1: Bar on limitation period for proceedings initiationThe appeal challenged an order by the Commissioner (Appeals) confirming a Service Tax demand against the appellant for charging transaction fees on turnover charges during a specific period. The appellant argued that the proceedings were time-barred as the show cause notice was issued after the normal limitation period. The appellant contended that there was no intention to defraud the government revenue, thus suppression or misstatement could not be alleged beyond the normal limitation period. Additionally, the appellant cited the contentious issue of the levy of Service Tax on transaction fees, referencing a favorable decision by the Tribunal in a similar case. The appellant highlighted a circular by the Board clarifying the treatment of such charges for Service Tax purposes.Issue 2: Taxability of transaction fee under 'forward contract service'The Tribunal noted the contentious nature of the issue regarding the levy of Service Tax on transaction fees charged by a stockbroker. While a previous Tribunal decision held that such charges were not subject to Service Tax, a circular by the Board clarified that these charges should be included in the value of taxable service for Service Tax payment. The Board also mentioned an exemption if the assessee acted as a 'pure agent' under Rule 5(2) of the Service Tax (Valuation) Rules, 2006. Given the confusion surrounding the taxability of transaction charges, the Tribunal found that the demand confirmed by the Department could not be sustained due to the proceedings initiated beyond the normal limitation period. Consequently, the Tribunal set aside the impugned order on limitation grounds and allowed the appeal in favor of the appellant.This judgment highlights the importance of adherence to limitation periods in tax proceedings and the significance of clarifications by regulatory bodies in resolving contentious taxability issues.
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