CESTAT sets aside Service Tax Demand issued beyond Extended Period of Limitation in Cross Appeals [Read Order]

The Kolkata Bench Of The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) observed that a Service Tax Demand was issued beyond the period of limitation and set aside the same.

The appellant is engaged in the business of providing various services under the category of ‘Technical Testing and Analysis Service’, ‘Survey and Map Making Service’ etc.

On the ground that the turnover shown by them in the ST-3 Returns was lower than the turnover shown by them in their Income Tax and Balance Sheet, Show Cause Notice was issued on 31/3/2009 for the period July 2003 to March 2008 demanding Service Tax of Rs.98,77,781/-.

The Appellants argued both on merits and on account of limitation by providing various documentary evidence before the Adjudicating Authority. After due process, the Adjudicating Authority vide the impugned OIO, dropped the demand to the extent of Rs.73,07,023/-. He confirmed the demand of Rs.25,70,758. B

Being aggrieved by the confirmed demand, the Appellant is before the Tribunal and being aggrieved by the dropped demand of Rs.73,07,023/-, the Revenue is before the Tribunal with cross appeal.

K. Kurmy & D. Dutta, Advocate represented the Appellant/Respondent-assessee and Joydip Chattopadhyay, Authorized Representative appeared for the Respondent/Appellant-department.

The Tribunal noted that, “the Appellant has obtained Service Tax Registration in October 2003 and has been filing their Returns regularly. The Department in its over-enthusiasm has issued the Show Cause Notice even for the period prior to five years. The Show Cause Notice has been issued for Rs.98.77 Lakhs whereas after thorough verification and reconciliation, the Adjudicating Authority has dropped the demand of Rs.73.07 Lakhs.”

“Even in respect of balance 25.7 Lakhs confirmed demand, we find that the clarification given on 23/08/2007 has been applied for the transaction carried out between April 2006 to 31/03/2008. Therefore, we hold that the demand for the extended period is legally not sustainable and confirmed demand for the extended period is set aside on account of limitation also”, the tribunal observed further.

The CESTAT Bench of R. Muralidhar, Member (Judicial) and K. Anpazhakan, Member (Technical) stated, “We agree with the submission of the assessee that till the new clarification was given on 23/08/2007, the Revenue was bound by the earlier clarification issued by the CBIC. Therefore, the demand prior to 22/08/2007 is legally not sustainable.”

However, it was held that the Appellant is required to pay the Service Tax on subcontract work (map making) undertaken by them for the main contractor between the period October 2007 to March 2008 only. It is noted from the OIO that the amounts paid by the assessee during the proceedings have been appropriated.

The amount payable, if any, for the period October 2007 to March 2008 is required to be adjusted against such appropriation, the Service Tax Tribunal added.

To Read the full text of the Order CLICK HERE

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