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2011 (8) TMI 1036 - HC - Service TaxService tax demand - also interest as envisaged under Section 75 of the Finance Act, 1994 and penalty in terms of Section 78 of the said Act - Held that:- An activity which amounted manufacture having been excluded from the definition of ‘business auxiliary services’ there may have been doubt as to whether conversion of coke into coal on behalf of clients constituted taxable service. Moreover, Service Tax Authorities were also not sure of the exact Clause of Section 65(19) into which the activity of conversion of coke into coal on behalf of clients would fall at the material time, and accordingly did not specify the clause. The correspondence on record reveals that there was also confusion with regard to intra-port service. Sometimes the authorities contended that intra-port services constituted ‘cargo handling services’. At other times they contended that the services constituted ‘port services’. The services did not fit into the definition of port-services prior to its amendment with effect from 2010 or into the definition of ‘cargo handling services’. In the impugned show cause notice it is claimed that the activities constituted business auxiliary service. If the services clearly fell within the ambit of business auxiliary service, there would be no need to amend the definition of port-services. In any case there was some confusion. If there was any confusion or doubt which had to be cleared by amendment, it cannot be said that there was wilful suppression or contravention of Chapter V to evade payment of Service Tax, so as to attract the proviso to Section 73(1) of the Finance Act, 1994.It is immaterial that the petitioner is registered in Kolkata but explanation had been given to the authorities of Paradeep, Ranchi and Dhanbad. If the queries were answered, it cannot be said that there was wilful suppression. It appears that the concerned authorities initially accepted the explanation of the assessee, but later proceeded to issue the impugned show cause notice upon change of opinion. The impugned show cause notice is barred by limitation. The show cause notice is thus set aside.
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