2018 (8) TMI 1687 - AT - Service Tax

Tribunal rules in favor of appellants, finding no willful suppression or intent to evade payment of Service Tax

The Tribunal allowed the appeal, ruling that the appellants were liable to pay Service Tax only for the normal period after 20.04.2005. The extended ... Liability of Service Tax - It was alleged in the SCN that the appellants have rendered taxable services as management consultants; commercial training or coaching centres and Mandap Keeper and therefore are eligible to pay Service Tax for the period 2000-2001 to 2004 to 2005 - extended period of limitation - Held that:- In the case of the appellants, no such positive act or willful suppression, willful mis-statement and an intention to evade Service Tax is established - What is required is that suppression should be willful; the appellants being a Government-sponsored organization cannot be alleged to have intent to evade payment of duty. Understandably, no personal benefit or for that matter, no benefit whatsoever across the organization for such non-payment of tax - also, a major part of the SCN is hit by limitation. The appellants are liable to pay Service Tax in the normal period i.e. after 20.04.2005 - demand restricted to normal period - appeal allowed in part. Issues:1. Whether the appellants are liable to pay Service Tax for the period mentioned in the show cause notice (SCN)Rs.2. Whether the extended period for demand of Service Tax can be invoked against the appellantsRs.3. Whether the appellants' bona fide belief can be considered as a defense against the demand of Service TaxRs.4. Whether the appellants' actions constitute willful suppression or intent to evade payment of dutyRs.Analysis:Issue 1: Liability to Pay Service TaxThe appellants were issued a show cause notice (SCN) seeking demand of Service Tax for services rendered under various categories. The appellants contended that they were a non-profit organization sponsored by the Government and believed they were not liable to pay Service Tax. They argued that they were willing to discharge the duty liability after a certain date as clarified by the Revenue Secretary. The Tribunal found that the appellants were liable to pay Service Tax for the normal period after 20.04.2005.Issue 2: Invocation of Extended PeriodThe Tribunal considered the invocation of the extended period for demand of Service Tax. It was argued by the appellants that no positive act or willful suppression to evade Service Tax was established. Citing relevant case laws, the Tribunal emphasized that extended period can only be invoked in cases of willful misstatement, suppression of facts, or intent to evade payment of duty. The Tribunal concluded that the extended period cannot be invoked against the appellants.Issue 3: Bona Fide Belief as DefenseThe appellants pleaded a bona fide belief that they were not liable to pay Service Tax. They had sought clarification from the Revenue Secretary and contended that they had no intent to evade payment of duty. The Tribunal considered the appellants' actions and found that their belief, coupled with seeking clarification, was a valid defense against the demand of Service Tax for the period in question.Issue 4: Willful Suppression or Intent to Evade PaymentThe Tribunal analyzed whether the appellants' actions amounted to willful suppression or intent to evade payment of duty. It was established that the appellants, being a Government-sponsored organization, had no motive to evade payment of duty. The Tribunal noted that willful suppression should be positive and intentional, which was not the case with the appellants. Therefore, the Tribunal held that the appellants did not engage in willful suppression or intent to evade payment of duty.In conclusion, the Tribunal allowed the appeal and restricted the demand of Service Tax to the normal period after 20.04.2005, considering the appellants' bona fide belief and lack of willful suppression or intent to evade payment of duty.