2023 (8) TMI 350 - AT - Service Tax

Service tax demand on chartered accountant services time-barred as Tribunal rules in favor of appellant

CC Chokshi & Co. Versus C.S.T. -Service Tax – Ahmedabad

The Tribunal held that the demand for service tax on chartered accountant services provided by the appellant as a sub-contractor was time-barred. The ... Extended period of limitation - service tax on chartered accountant service provided by the appellant as a sub-contractor to the main contractor M/S. Deloitte Haskins and Sells - HELD THAT:- There is no contest of taxability on merit however, the appellant have strongly submitted that the demand is hit by limitation. In this regard, it is found that the appellant were issued other show cause notice and this tribunal has dropped the demand on limitation in CC CHOKSHI & CO. VERSUS C.S.T. SERVICE TAX-AHMEDABAD [2019 (1) TMI 2028 - CESTAT AHMEDABAD]. From the above decision in the appellant’s own case it is clear that the issue has been raised earlier also by the Revenue therefore, the activity of the appellant was very much known to the department, hence, the department was not prevented to issue the show cause notice for the subsequent period within a normal time period. It is also noted that during the relevant period i.e. 2005 -2006, the board circular dated 31.10.1996 was in force and according to which the appellant was not required to pay the service tax being a sub-contractor. For this reason also the appellant had a bona fide belief that they are not liable to pay any service tax. The issue of limitation has been decided by the Hon’ble Supreme Court in the case of NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP [2006 (4) TMI 127 - SUPREME COURT] wherein it was held that once on a particular issue the show cause notice has been issued, on the same issue for the subsequent period no extended period can be invoked as demand for the extended period do not sustain being time bar. The demand is clearly hit by limitation. Hence, the impugned order is set aside - Appeal allowed. Issues involved: Whether the chartered accountant service provided by the appellant as a sub-contractor is liable to service tax and whether the demand of service tax is hit by limitation due to the issuance of show cause notices for the same service.Summary:The appellant, represented by Ms. Shrayashree T., did not contest the taxability of the service but argued strongly on the limitation issue. Referring to Circular No. F.No. 341/43/96- TRU, it was claimed that the appellant, as a sub-contractor, was not liable to pay service tax. The appellant's position was further supported by a larger bench decision in the case of Melange Developers Pvt. Ltd. The appellant emphasized that there was no suppression of fact on their part, and hence, the demand was time-barred.The Revenue, represented by Shri G. Kirupanandan, reiterated the findings of the impugned order without contesting the taxability on merit but opposing the limitation argument put forth by the appellant.Upon careful consideration, the Tribunal noted that the demand in the present case was similar to a previous case where the Tribunal had dropped the demand on limitation grounds. The Tribunal referred to the previous order which set aside the demand based on the timing of service provision and payment, as well as a circular exempting sub-contractors from paying service tax when the main contractor discharged the tax. The Tribunal also highlighted an exemption for management consultancy services during the relevant period, further supporting the decision to set aside the demand.The Tribunal observed that the issue had been raised earlier by the Revenue, indicating that the department was aware of the appellant's activities. Considering the relevant circular in force during the period in question, the Tribunal concluded that the appellant had a bona fide belief that they were not liable to pay service tax. Citing a Supreme Court decision, the Tribunal held that the demand was clearly hit by limitation, setting aside the impugned order and allowing the appeal with consequential relief.The judgment was pronounced in the open court on 03.08.2023.