2023 (10) TMI 501 - AT - Service Tax

Revenue's Appeal Dismissed, Service Tax Imposition Set Aside

The Tribunal dismissed the Revenue's appeal, finding that the Show Cause Notices issued to the assessee-appellant were barred by limitation and that the ... Levy of service tax - outdoor catering service - appellant entered into the agreements with Indian Institute of Technology (IIT), Kanpur for providing the mess services - extended period of limitation - HELD THAT:- On reading of the statutory provisions of Section 73 of FA, it is amply clear that proposal for recovery of service tax in normal circumstances should be confined to eighteen months only; whereas, under exceptional circumstances, the said period can be extended upto a period of five years, subject to fulfilment of the conditions that the ingredients itemized in the proviso clause were satisfied. The issuance of the notice within the normal period is the rule and invoking the extended period is the exception and in such an event, the onus entirely lies with the department to prove that in fact the notice can be issued by invoking the extended period of limitation. In the present case, the entire modus operandi adopted by the assessee-appellant of providing the mess facilities at IIT, Kanpur were known to the department through the exchange of various communication between both the sides. Further, the contents of the agreements, referred supra, were also known to the department well in advance. Since, no additional documents were relied upon by the department for confirmation of the adjudged demands beyond the normal period, we do not find any substance in the appeal filed by the Revenue that the show cause proceedings are not barred by limitation of time. The Hon’ble Supreme Court, in the case of PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [1995 (3) TMI 100 - SUPREME COURT] have ruled that when the Revenue authorities were aware of the facts about the assessee’s activities, then issuance of show cause notice should be confined to the normal period. The above referred judgement, though were delivered in context with Section 11A of the Central Excise Act, 1944, but the ratio is squarely applicable to the case in hand, inasmuch as Section 11A ibid, is pari materia with the provisions of Section 73 ibid. The show cause proceedings initiated by the department for the period 2006-2007 to 2010-2011 are barred by limitation of time. Therefore, appeal filed by Revenue on such ground is dismissed. The assessee-appellant is liable to pay the adjudged demand of service tax along with interest and penalties for the services provided during the period 01.04.2012 to 30.06.2012. Therefore, the impugned order to such extent is set aside and the appeal is allowed in favour of the assessee-appellant. Issues Involved:1. Limitation of time for issuing Show Cause Notice (SCN).2. Applicability of service tax exemption under Notification No. 25/2012-ST.3. Liability for service tax for the period from 01.04.2012 to 30.06.2012.Summary:1. Limitation of Time for Issuing Show Cause Notice (SCN):The Tribunal examined whether the SCNs issued to the assessee-appellant were barred by limitation. The assessee-appellant had informed the department about their activities and VAT payments as early as 2008. Despite this, the SCN was issued in 2013, almost five years later. Sub-section (1) of Section 73 of the Finance Act, 1994, mandates that SCNs should be issued within eighteen months from the relevant date, extendable to five years only in cases involving fraud, collusion, wilful misstatement, suppression of facts, or contravention of provisions with intent to evade tax. The Tribunal found that the department was aware of the assessee-appellant's activities, and no new facts were presented to justify the extended period. Citing the Supreme Court judgments in Pushpam Pharmaceuticals and Anand Nishikawa, the Tribunal held that the SCNs were barred by limitation, dismissing the Revenue's appeal on this ground.2. Applicability of Service Tax Exemption under Notification No. 25/2012-ST:The Tribunal considered whether the services provided by the assessee-appellant qualified for exemption under Notification No. 25/2012-ST, which exempts auxiliary educational services provided to educational institutions. The CBEC Circular No. 172/7/2013-ST clarified that catering services provided to students in educational institutions qualify for this exemption. The Tribunal agreed with the Commissioner (Appeals) that the services provided by the assessee-appellant from 01.07.2012 to 31.03.2013 were exempt under the notification and dismissed the Revenue's appeal on this ground.3. Liability for Service Tax for the Period from 01.04.2012 to 30.06.2012:The Commissioner (Appeals) had remanded the matter to the lower authority to compute the service tax liability for this period and consider penalties. The assessee-appellant argued that they were not liable for service tax, citing a similar case involving M/s Asha Caterers, where the Additional Commissioner had dropped the SCN proceedings. The Tribunal found that the order in the Asha Caterers case had not been appealed against and had attained finality. Citing the Supreme Court judgment in Novapan Industries, the Tribunal held that the department cannot adopt a different stance in similar cases. The Tribunal set aside the impugned order to the extent that it imposed service tax for the period from 01.04.2012 to 30.06.2012, allowing the appeal in favor of the assessee-appellant.Conclusion:The Tribunal dismissed the Revenue's appeal and allowed the assessee-appellant's appeal, setting aside the impugned order concerning the service tax liability for the period from 01.04.2012 to 30.06.2012. The cross-objection filed by Revenue was disposed of.