Tribunal Overturns Time-Barred Service Tax Demand, Finds No Mala Fide Intent

The Tribunal set aside the order confirming the service tax demand, ruling that the demand was time-barred and incorrectly confirmed by the Commissioner (Appeals). The appeal was allowed in favor of the appellant as the Tribunal found no mala fide intent to evade service tax, leading to the dismissal of the invocation of the extended period for issuing the show cause notice.

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Issues:
- Confirmation of service tax demand
- Invocation of extended period for issuing Show Cause Notice

Confirmation of service tax demand:
The appellant, providing "Business Auxiliary Service" on a commission basis, collected a significant amount without discharging the service tax liability. The demand of Rs.9,09,689/-, interest, and penalty were proposed and confirmed by the adjudicating authorities. The appellant did not contest the demand on merits but challenged the confirmation based on the invocation of the extended period of limitation. The appellant argued that failure to supply information should not be considered suppression justifying the extended period. The appellant's contention was that the show cause notice was issued in 2020 for the period from 2014 to 2017, rendering the demand time-barred. The department, however, emphasized the appellant's non-disclosure as suppression justifying the extended period. The Tribunal observed that the appellant did not register under Service Tax Commissionerate while providing the service and did not obtain service tax registration. The appellant's belief that the commission received was income, not service tax liability, was considered bona fide. The Tribunal held that there was no mala fide intent to evade service tax, and the extended period could not be invoked.

Invocation of extended period for issuing Show Cause Notice:
The Tribunal analyzed the provision allowing the department to issue a show cause notice beyond the normal limitation period in cases of fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions with intent to evade service tax. It was noted that mere non-disclosure without intent to evade duty does not constitute suppression. The Tribunal cited Supreme Court decisions emphasizing that suppression requires deliberate non-disclosure to evade duty. The Tribunal held that the appellant's non-payment of service tax was due to a genuine belief about the liability, not an intent to evade duty. The show cause notice was based on information from the Income Tax Department, indicating no intent to evade liability. The Tribunal concluded that the demand was time-barred and set aside the order confirming the demand.

In conclusion, the Tribunal set aside the order confirming the service tax demand, holding that the demand was time-barred and wrongly confirmed by the Commissioner (Appeals). The appeal was allowed in favor of the appellant.

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