TaxTMI 
TaxTMI 
2026 (2) TMI 181
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....ation of the demand of Service Tax, along with interest, and imposition of penalties, the appellant has filed the present appeal. 2. During the course of hearing, the appellant submitted that the entire demand has been raised against them on the basis of details of income furnished by them in their balance-sheet / Income Tax Returns for the Financial Years 2011-12 to 2014-15. It is submitted that the Show Cause Notice in this case has been issued on 03.01.2017 by invoking the extended period of limitation. The submission of the appellant is that they have not suppressed any information from the Department and the entire details required for raising the demands have been taken from the balance-sheet and Income Tax Returns filed by the appellant themselves. Thus, it is the contention of the appellant that the demand confirmed against them by invoking the extended period of limitation is not sustainable. 2.1. Regarding the merits of the demands confirmed, the appellant has pointed out that majority of the said demand pertains to the activity of "textile processing" undertaken by them. The following table shows the details of the demands confirmed on account of 'textile proce....
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....ity service' and 'labour charges', the appellant states that the respective service providers have raised invoices along with Service Tax thereon, and they have paid the Service Tax to them; accordingly, the demand of Service Tax in respect of the said services under reverse charge mechanism cannot be sustained. 2.3.3. In respect of the demand confirmed under the category of 'legal charges', the appellant submits that they are not pressing the said demand and agreed to pay the Service Tax for the same. 2.4. In view of the above submissions, the appellant pleads that the demand confirmed on these other services are liable to be set aside on the ground of limitation, excepting the demand in respect of 'legal charges' which is not being contested by them. 3. On the other hand, the Ld. Authorized Representative representing the Revenue has reiterated the findings in the impugned order. 4. Heard both sides and perused the records. 5. Regarding the demand of Service Tax of Rs.65,96,466/- and Rs.56,53,087/- which have been confirmed under the category of 'business support service' for the Financial Years 2011-12 and 2012-13 (up to 30.06.2012) respectively, we find that the ....
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....aken by the appellant amounts to 'manufacture' for the period prior to 30.06.2012 also. Accordingly, we hold that the demand of Service Tax confirmed in the impugned order for the period prior to 30.06.2012, under the category of 'business support service' is not sustainable. 5.2. In this context, it is pertinent to mention here that Notification No. 14/2004-S.T. dated 10.09.2004, as amended vide Notification No. 19/2005-S.T. dated 07.06.2005 specifically exempts the activity of 'textile processing' undertaken by the appellant from the levy of Service Tax. For the sake of ready reference, the relevant extracts of the said Notifications are reproduced below: - • Notification No. 14/2004-S.T., dated 10-9-2004 "In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable service provided to a client by a commercial concern in relation to the business auxiliary service, insofar as it relates to, - ..... (b) production of goods on behalf of the client; ... ....
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....firmed in the impugned order in respect of the said activity undertaken by the appellant for the period from 2011-12 and 2012-13 up to 30.06.2012. 5.5. As the above demand itself does not sustain, the question of demanding interest or imposing penalty in respect of the said demand does not arise and hence we set aside the same. 6. In respect of 'renting of immovable property' and 'renting of machinery', as undertaken by the appellant in this case, we find that the appellant has not declared these services rendered by them specifically either in the balance sheet or in the Income Tax Returns filed by them. Thus, we find that there is no way that the Departmental Officers would have come to know about the activity of 'renting' undertaken by the appellant. Therefore, we hold that suppression of fact with the intent to evade payment of tax stands established in respect of rendering of these services. 6.1. On this issue, the appellant has cited various case-laws to support their claim that the extended period cannot be invoked in these cases to demand Service Tax. However, we find that the decisions cited by the appellant are not applicable to the facts of this case, si....
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.... Service Tax from the appellant, which the appellant have paid. Hence, the demands of Service Tax on these activities from the appellant on reverse charge basis are also not legally sustainable. Hence, the said demands are set aside. 7.2. As the above said demands are not sustainable, the question of demanding interest or imposing penalties on these demands does not arise. 7.3. We find that a penalty of Rs.10,000/- has been imposed on the appellant under Section 77(1)(a) of the Act. It is relevant to note that Section 77(1)(a) of the Finance Act, 1994 imposes a penalty on any person liable to pay service tax who fails to take the required registration. As the appellant is liable to pay Service Tax on the 'renting of immovable property' and 'renting of machinery' services and not taken registration for the said services, we uphold the penalty imposed on the appellant under Section 77(1)(a) of the Finance Act, 1994. 8. As regards the demand confirmed under the category of 'legal charges', we find that the appellant has not disputed the said demand. Accordingly, the demand confirmed, along with interest and penalty thereon, in the impugned order under the cate....