2018 (10) TMI 406 - HC - Service Tax

High Court upholds Tribunal decision on limitation period under Finance Act, 1994

The High Court dismissed the appeal challenging the Tribunal's decision on invoking the extended period of limitation under Section 73(1) of the Finance ... Extended period of limitation - Section 73(1) of the Finance Act, 1994 - assessment of Service Tax - Business Auxiliary Services - Held that:- The CESTAT was influenced, as is apparent from the reading of the order, by the prevailing confusion between the nature and content of the two taxable incidents i.e. the definition between “business auxiliary services”, which insisted from 2003 and “business support services”, which was a fresh levy introduced w.e.f. 01.05.2006. Concededly, the assessee was filing his assessment returns after 01.05.2006 when business support service was introduced. The mere advertence to the possibility of service tax – without any material or evidence – or even a finding that such service tax had been collected by the assessee during the past, cannot per se amount to a conclusion that it had practiced fraud or misrepresentation - invocation of extended period not justified. Appeal dismissed - decided against Revenue. Issues:1. Correctness of Tribunal's order on invoking the extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994.Detailed Analysis:The Revenue's appeal under Section 35G of the Central Excise Act, 1944 challenges the Tribunal's order regarding the invocation of the extended period of limitation. The case involved a show cause notice issued to the assessee proposing assessment of service tax for a specific period. The Commissioner confirmed the demand and invoked the extended period, influenced by the conditions of the agreement between the assessee and its service recipients. However, the CESTAT set aside the invocation of the extended period, citing confusion between 'business auxiliary services' and 'business support services.' The CESTAT held that the assessee could not be faulted due to the confusion surrounding the two types of services.The appellant argued that the assessee was aware of its tax liability and had factored it into contracts with clients. The appellant contended that the CESTAT erred in concluding that no misrepresentation occurred. The CESTAT's decision was influenced by the confusion between the two taxable incidents and the timing of the introduction of 'business support services.' The Supreme Court precedent highlighted that mere omission to fulfill tax liability does not automatically imply fraud or misrepresentation. The CESTAT's order was consistent with this legal principle.The High Court found no reason to interfere with the CESTAT's order, concluding that the question of law did not arise in the case. Therefore, the appeal was dismissed.