Tribunal Overturns Service Tax Demand on Bond Commission; Extended Limitation Period Unjustified, Demand Time-Barred

The Appellate Tribunal CESTAT KOLKATA allowed the appeal, setting aside the demand for service tax on commission income received for the sale of bonds. The tribunal found that the invocation of the extended period of limitation was not justified, as there was no suppression of information by the Appellant. The demand related to the period 2003-2004, and the Show Cause Notice was issued in 2007, which was beyond the normal limitation period. The tribunal concluded that the demand was time-barred, leading to the reversal of the lower authorities' decision. Judgment was pronounced on 27.06.2023.

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Issues involved:
The issues involved in the judgment are the demand of service tax on commission income received for sale of bonds, rejection of bills by lower authorities, suppression of information, and the invocation of extended period of limitation for raising the demand.

Details of the judgment:

Demand of service tax on commission income:
The Appellant, engaged in providing Clearing and Forwarding Agency services and sale of bonds, received a Show Cause Notice for non-payment of service tax on commission income. The lower authorities confirmed the demand, which was upheld on appeal. The Appellant contended that services related to marketing of securities were rendered before the introduction of service tax under 'Business Auxiliary Service.' However, the bills submitted as evidence were rejected due to lack of a running serial number, leading to the rejection of the claim.

Rejection of bills and suppression of information:
The Appellant argued that they did not suppress any information, as the commission income was reported in their Audited Balance Sheet. The lower authorities invoked the extended period of limitation for raising the demand, but the Appellant maintained that since there was no suppression of facts, the demand based on the extended period was not sustainable.

Invocation of extended period of limitation:
The demand in the impugned order pertained to the period 2003-2004, with the Notice issued in 2007, beyond the normal limitation period. The Audit team collected details of commission income from the Audited Balance Sheet, indicating no suppression. Consequently, the demand based on the extended period was deemed time-barred, leading to the setting aside of the impugned order on the ground of limitation.

In conclusion, the appeal filed by the Appellant was allowed, with the judgment pronounced on 27.06.2023 by the Appellate Tribunal CESTAT KOLKATA.

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