Patel Labour Contractor Pvt. Ltd. Vs. C.S.T.-Service Tax - Ahmedabad - (Customs, Excise and Service Tax Appellate Tribunal) (19 Apr 2021)

If there is a legal dispute which involved interpretation of law, mala-fide intention with intent to evade payment of service tax cannot be attributed to the assessee

MANU/CS/0024/2021

Service Tax

The brief facts of the case are that, the Appellants were engaged in supply of manpower to various industrial organizations as per the arrangements with the service recipients. The Appellants would charge 10% of the actual wages to be paid to the workers so hired/supplied as their service charges. The Appellants have recovered the wages/salary to be paid to the manpower supplied by them from the service recipient and paid to the man power. The Appellants have treated the wages/ salary as reimbursable expenses. The Appellants have discharged the service tax on the aforesaid 10% service charges.

A show cause notice was issued to the Appellants demanding the service tax for the period 2005-06 to 2009-10 on the ground that, the Appellants were required to pay service tax on the gross value including the wages/salary paid to the manpower so supplied. The show cause notice calculated the demand of service tax including the wages/ salary paid to the man power so supplied. The show cause notice also alleged suppression, wilful misstatement on the part of the Appellants and invoked the extended period of limitation. After considering the reply filed by the Appellant, the Learned Commissioner of Service Tax, confirmed the demand of service tax as proposed in the show cause notice.

The Appellant is registered with the service tax authority. They filed periodically ST-3 return in respect of service provided by them declaring the value as per their bona fide belief which is equal to commission which they received from the service recipient. With this disclosure, the revenue is very much in the knowledge about the nature of service provided by the Appellant therefore, the revenue was not prevented to verify the correctness of the nature of service as well as the value declared by the Appellant in their ST-3 return. In this undisputed fact, it cannot be said that, the Appellant have suppressed the vital fact with intention to evade service tax.

It is settled that, if on any issue there is a legal dispute which involved interpretation of law, the mala-fide intention or suppression of fact with intent to evade payment of service tax cannot be attributed to the assessee. On this ground also, the extended period of demand was not invokable.

As per the facts in the present case, the period of dispute i.e. 2005-06 to 2009-10 and show cause notice was issued on 19th May, 2011. It is also observed that, the Appellant has filed their ST-3 return covering the period October 2009 to March 2009 on 27th April, 2010. As per the facts, the entire demand is beyond the normal period. The entire demand is time barred. The impugned order is set aside on the ground of demand being time bar without going into the merit. Appeal is allowed.

Tags : DEMAND CONFIRMATION LEGALITY