Appellant not liable for service tax, exemptions applied, demands barred by limitation.

The Tribunal held that the appellant was not liable to pay service tax under "Business Auxiliary Service" from 01.07.2003 to 08.07.2004 due to exemption under Notification No.13/2003-ST. Additionally, the appellant was not liable to pay service tax prior to 01.07.2003 as the service was not in the statutory book. The demands were found to be barred by limitation, and as the demands were not sustainable, no interest or penalties were payable. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief to the appellant.

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Issues Involved:
1. Liability to pay service tax under "Business Auxiliary Service" during the impugned period.
2. Liability to pay service tax prior to 01.07.2003.
3. Whether the demands raised are barred by limitation.
4. Liability to pay interest and penalties on the impugned demand.

Issue No. (a): Liability to Pay Service Tax under "Business Auxiliary Service"

The Tribunal examined whether the appellant was liable to pay service tax under Section 65 (19) of the Finance Act, 1994, for activities as a commission agent during the period 2003-04 and 2004-05. The Tribunal found that "Business Auxiliary Service" was introduced w.e.f. 01.07.2003, and the appellant's activities fell under this category. However, Notification No.13/2003-ST dated 20.06.2003 exempted commission agents from service tax. The Tribunal cited the case of Brindco Sales Ltd., where it was held that the appellant's activities as a commission agent were exempt under the said notification. Therefore, the Tribunal concluded that the appellant was not liable to pay service tax from 01.07.2003 to 08.07.2004.

Issue No. (b): Liability to Pay Service Tax Prior to 01.07.2003

The Tribunal noted that "Business Auxiliary Service" was not in the statutory book prior to 01.07.2003. Hence, the appellant was not liable to pay service tax for that period. The Tribunal also observed that the adjudicating authority failed to consider the records provided by the appellant, which showed no service tax was payable before 01.07.2003.

Issue No. (c): Whether the Demands Are Barred by Limitation

The Tribunal found that audits for the impugned periods were conducted in February and October 2005, and the show-cause notice was issued on 26.09.2008. Since all relevant facts were in the knowledge of the Department and there was no suppression of facts by the appellant, the Tribunal held that the demands were barred by limitation as the extended period of limitation was incorrectly invoked.

Issue No. (d): Liability to Pay Interest and Penalties

Given that the demands were not sustainable, the Tribunal concluded that the appellant was not required to pay any interest or penalties. The Tribunal set aside the impugned order and allowed the appeal with consequential relief to the appellant.

Conclusion:

The Tribunal held that no service tax was payable by the appellant for the impugned period, and thus, no interest or penalties were leviable. The impugned order was set aside, and the appeal was allowed with consequential relief.

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