2025 (8) TMI 91 - AT - Service Tax

Bolpur Commissionerate Lacked Jurisdiction; Service Tax Demand Quashed Under Notification 25/2012 and Limitation Rules

The CESTAT Kolkata held that the Bolpur Commissionerate lacked territorial jurisdiction to issue the SCN as the appellant's service activities and ... Service of SCN - jurisdiction of Bolpur Commissionerate to issue the Notice to demand service tax - difference in the value declared in the ST-3 returns filed - eligibility for exemption under Sl. Nos. 12, 12A, 13, and 29(h) of Exemption N/N. 25/2012 dated 20.06.2012 - invocation of extended period of limitation. HELD THAT:- It is a fact on record that the appellant has separate registrations having registration No. AEAPK6185QSD005 at Kolkata and Registration No. AEAPK6185QSD001 at Bolpur. It is observed that on receipt of the data from the Income Tax department, officers of Bolpur Commissionerate sought various details from the appellant and recorded statements. Shri. Rounak Kumar Jain authorised representative of the appellant, in his statement dated 24.11.2020 has categorically stated that they have not rendered any service within the jurisdiction of Bolpur Commissionerate and hence they have not filed any returns with respect to the Registration No. AEAPK6185QSD001. Regarding the reasons for the difference in the value declared in the ST-3 returns filed by them in the Service Tax Commissionerate under Service Tax registration No. AEAPK6185QSD005, he has explained that they have rendered various services such as Road Construction, construction of historical monuments, construction of buildings meant predominantly for use other than for commerce and industry which were exempted from payment of service tax in terms of Sl no 12, 12A, 13 and 29(h) of the Exemption Notification No 25/2012 dated 20.06.2012. The territorial jurisdiction of Principal Commissioner, CGST & Central Excise, Bolpur extends only to the Districts of Murshidabad, Birbhum, Purulia, Purba Bardhman, Paschim Bardhman and Bankura in the State of West Bengal vide notification No. 13/2017-CE (N.T.), dated 09.06.2017. Thus, it is observed that the Principal Commissioner at Bolpur does not have territorial jurisdiction on Service Tax matters over the city of Kolkata. Further, the appellant has a separate registration and filing returns with respect to the registration at kolkata. Thus, there are merit in the submission of the appellant that the show cause notice issued by the commissioner, Bolpur is without jurisdiction and hence it is void ab initio. Demands raised on the basis of the data received from the Income tax department and the information available in the balance sheet and Profit and Loss Account - HELD THAT:- The appellant have been filing ST-3 returns regularly from their office premises located at Kolkata, which falls within the Service Tax jurisdiction of Range IV, BBD Bagh II Division, Kolkata North Commissionerate. Thus, the appellant have not suppressed any information from the department. During the material period the appellant have rendered services which are not chargeable to service tax. They have submitted all the documents such as Audited Financial Statement, Copy of Agreement/Work Order, Payment Certificates, Form 26AS, Copy of Ledgers etc to establish that they have rendered services to Government organisations which are exempted from payment of service tax as provided under Sl no 12, 12A, 13 and 29(h) of Exemption Notification 25/2012. However, the Ld. adjudicating authority has not considered the claim of the appellant. Extended period of limitation - HELD THAT:- The demands have been raised on the basis of the data available in the balance sheet and Profit and Loss Account. The department has not brought in any new evidence to allege suppression of facts. Accordingly, extended period cannot be invoked to demand service tax in this case. The demand has been raised for the period 01.04.2015 to 30.06.2017 and the Show cause Notice was issued on 17.12.2020. The appellant have been regularly filing ST-3 returns during the Period Apr 2017 to June 2017 and the last return was filed on 19.01.2018. As there is no suppression of fact with intention to evade the tax established in this case, demand can only be raised for the normal period of limitation of 30 months, which expires of 19.07.2020. However, the SCN in this case has been issued on 17.12.2020, which is beyond the normal period limitation. Thus, the entire demand confirmed in the impugned order is liable to be set aside on the ground of limitation. Accordingly, the demand of service tax confirmed along with interest in the impugned order set aside, by invoking extended period of limitation. As the demand itself is not sustained, the question of demanding interest or imposing penalties does not arise and hence the same is set aside. The impugned order is set aside - appeal allowed. ISSUES: Whether the show cause notice issued by the Commissionerate lacking territorial jurisdiction is valid or void ab initio.Whether the appellant is entitled to exemption under Sl. Nos. 12, 12A, 13, and 29(h) of Exemption Notification No. 25/2012 dated 20.06.2012 for services rendered.Whether the extended period of limitation under Section 73 of the Finance Act, 1994, can be invoked for raising service tax demand based on data from the Income Tax Department and public documents like balance sheets and Form 26AS.Whether there was suppression of facts or wilful misdeclaration by the appellant warranting invocation of extended limitation period.Whether the demand of service tax along with interest and penalty confirmed in the impugned order is sustainable in law. RULINGS / HOLDINGS: The show cause notice issued by the Commissionerate without territorial jurisdiction is void ab initio, and demands confirmed on such notice are not sustainable under law.The appellant is entitled to exemption under Sl. Nos. 12, 12A, 13, and 29(h) of Exemption Notification No. 25/2012 for the services rendered, as these pertain to exempted activities such as road construction and construction of buildings predominantly for non-commercial use.The extended period of limitation under Section 73 of the Finance Act, 1994, cannot be invoked merely on the basis of data from the Income Tax Department or public documents like balance sheets and Form 26AS, absent any evidence of suppression or wilful misdeclaration.The appellant did not suppress any information or commit wilful misdeclaration; mere failure to declare does not amount to suppression, and thus extended limitation period provisions are not applicable.The demand of service tax along with interest and penalty confirmed in the impugned order is barred by limitation and is liable to be set aside; consequently, interest and penalty imposed are also set aside. RATIONALE: The territorial jurisdiction of the Principal Commissioner, CGST & Central Excise, Bolpur, extends only to specified districts and does not include the city of Kolkata; jurisdiction is conferred by law and cannot be assumed, rendering the notice issued without jurisdiction void ab initio.Exemption Notification No. 25/2012 exempts certain services including road construction and related consulting engineer services; the appellant's activities fall within these categories, supported by documentary evidence submitted but ignored by the adjudicating authority.Section 73 of the Finance Act, 1994, prescribes a maximum period of five years for raising demands; extended period can be invoked only upon proof of fraud or wilful suppression, which is absent here.Judicial precedents establish that data from Income Tax Department and public documents like balance sheets and Form 26AS do not constitute suppression or misdeclaration; positive act of concealment is required to invoke extended limitation.Reliance on authoritative decisions confirms that demands based on Income Tax data without evidence of suppression are barred by limitation, and penalties imposed without such proof are not sustainable.