2010 (6) TMI 189 - AT - Service Tax

Tribunal rules in favor of appellant due to expired limitation period for service tax demand

The Tribunal ruled in favor of the appellant, holding that the demand for service tax was barred by limitation. The appellant's activities fell under ... Demand- Limitation- The appellant is engaged in providing taxable service which is covered under the category of Business Auxiliary Service. Extended period invoked on the ground that registration not obtained and taxable value not declared. Held that- demand hit by time barred. Impugned order set aside. Issues:1. Service tax liability on the appellant for providing Business Auxiliary Service.2. Applicability of the period of limitation for the show cause notice.3. Interpretation of Board's Circular No. 87/05/2006-S.T. regarding activities of motor vehicle dealers and service stations under Business Auxiliary Service.Analysis:1. The appellant was providing taxable service falling under Business Auxiliary Service category and had received service tax demand of Rs. 1,53,643/- for referring clients to financial institutions. The issue revolved around the service tax liability of the appellant for such activities.2. The main contention was the period of limitation for the show cause notice issued on 24-7-08. The authorities had invoked a longer period of limitation due to the appellant's failure to obtain service tax registration and declare the value of the service. The Commissioner (Appeals) held that this amounted to suppression of facts to evade tax liability.3. The appellant's advocate referred to Board's Circular No. 87/05/2006-S.T. dated 6-11-06, which highlighted doubts regarding activities of motor vehicle dealers and service stations promoting financial institutions. The circular clarified that such activities would fall under Business Auxiliary Service. The appellant argued that since there was a doubt acknowledged by the Board, the benefit should be extended to them.4. The Tribunal agreed with the appellant, noting the doubt expressed in the circular regarding the coverage of the appellant's activities under Business Auxiliary Service. As the circular was issued before the show cause notice and the period in question, the demand was held as barred by limitation. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant with consequential relief.