TaxTMI 
TaxTMI 
2024 (4) TMI 823
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....he demand of service tax of Rs. 1,47,46,555/- under seven heads invoking extended period of limitation under section 73 of the Finance Act, 1994 [Finance Act] along with interest under section 75 and imposed penalty equal to the demand of service tax under section 78. 3. When the SCN was issued, the normal period of limitation was eighteen months and the extended period of limitation was five years. The SCN was dated 26.9.2014 covering the period 2009-2010 to 2013-2014. Thus, part of the demand was within the normal period and rest fell under the extended period of limitation. 4. We have heard learned counsel for the appellant and the learned authorised representative for the Revenue and perused the records. We now proceed to examine the issues. 5. Of the seven heads under which the service tax was demanded, the appellant paid the service tax and interest on two, viz., Sponsorship service (Rs. 10,169/- with interest) and GTA service (Rs. 5,101/- with interest). The remaining five heads under which the demands have been confirmed by the Commissioner and disputed before us are as follows: Amounts received by the appellant from Priyadarshini Gas Seva [PGS] 6. In the impugned ord....
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....he legal fee which it had paid to its legal consultants. However, it declined to pay service tax of Rs. 1,26,820/- on such amounts which were paid to the legal consultants to reimburse the court fee paid or reimbursed travelling expenses. 10. Learned authorised representative reiterated the Commissioner's findings that 'the entire expenditure booked under this head was subject to tax whereas the tax has been deposited partially by the party.' 11. Service tax is to be paid on the consideration paid for a service which was a taxable service (up to 2012) or for service not under negative list (after 2012). It is not, as wrongly held by the Commissioner, on the expenditure booked by the assessee. Under the head Legal Consultancy Service, the appellant had booked some amounts of which to the extent they represented payments made for the legal services, it had paid service tax. Rest of the amounts booked under this head in the appellant's books of accounts were also paid to the lawyers either for the court fee or towards reimbursements of travel expenses. Reimbursements are clearly not a consideration for a service but a compensation for what was incurred by one which was to be borne b....
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....According to the appellant, these amounts were received on account of sale of souvenir items, charges for issuing OPD booklets to their employees for the hospital run by them, guest house receipts where the daily rent was below Rs. 1,000/- recovery of penal rent from its employees, recovery of water and electricity charges from its employees, etc. 16. The Commissioner did not agree with this submission on the ground that the entries made were in the nature of income from various sources. Since the appellant was not a manufacturer, all its income must be from services only. Hence he held that the entire miscellaneous income received by the appellant is exigible to service tax. 17. We find that the Commissioner appears to have lost sight of the fact that service tax is not a tax on income but is tax on the provision of taxable service (before 2012) and provision of a service which is not under negative list (after 2012). Neither before 2012 nor after this date was service tax a tax on income. If an income is received which was not accounted for in the service tax returns, it is open to the department to investigate if that income was a consideration for rendering a taxable service ....
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....f or in relation to his employment; (c)......" 22. The case of the appellant is that it paid the amounts to its full time Directors who are its employees. Unless any contrary evidence can be brought on record by the Revenue, this must be accepted and if so, any service rendered by the Directors to the appellant and amounts which the appellant paid as compensation are clearly excluded from the scope of service tax by section 65 (44) (b) of the Act. 23. The demand on this head needs to be set aside and is set aside. Extended period of limitation and penalty under section 78 24. According to the appellant, extended period of limitation cannot be invoked in its case because none of the elements necessary to invoke extended period of limitation viz., fraud or collusion or wilful mis-statement or suppression of facts or the violation of the Act or Rules with an intent to evade payment of service tax were present. For the same reason, penalty under section 78 could not have been imposed because the same elements are necessary for a penalty to be imposed under section 78. 25. The Commissioner did not record any reasons for invoking extended period of limitation. However, on the qu....