2005 (12) TMI 572 - AT - Service Tax

Summary

Issues:
1. Invocation of larger period for demand of service tax.
2. Delay in issuing show-cause notice.
3. Liability of the appellant for service tax evasion.

Analysis:
1. The appeal involved the confirmation of a demand of service tax and imposition of penalty on the appellant, an advertising agency, for the period from October 1997 to December 2000. The appellant contended that the show-cause notice issued by the Deputy Commissioner did not invoke the larger period and there was no mis-declaration or suppression of facts to warrant such invocation. The appellant argued for the matter to be remanded to re-calculate the demand within the limitation period. The Department, however, argued that the appellant had admitted the liability but failed to remit the service tax, file ST-3 Returns, indicating a mala fide intention to evade payment.

2. The Tribunal observed that the statements from the appellant's proprietor were recorded on 13-12-2000, and the show-cause notice was issued on 7-12-2001 without invoking the larger period. Due to this delay in issuing the notice and absence of invoking the larger period, the Department could not enforce the demand for the extended period. The Tribunal noted that the appellant had initially complied by obtaining a license, paying service tax, and filing returns but failed to do so later due to business losses. The Tribunal set aside the demand for the larger period and remanded the matter to the Original Authority to re-calculate the demand within the statutory time limit and impose an appropriate penalty.

3. In conclusion, the Tribunal found in favor of the appellant regarding the invocation of the larger period for demand of service tax, citing the absence of such invocation in the show-cause notice and the inordinate delay in its issuance. The matter was remanded to re-calculate the demand within the statutory time limit, emphasizing the need for prompt action by the Department to recover dues. The Original Authority was directed to complete the proceedings within four months from the date of the order, ensuring a fair opportunity for the appellant to be heard.