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2017 (3) TMI 616 - AT - Service TaxFranchise Service - Extended period of limitation - it is submitted that since the business activities of the appellant were known to the Department, suppression of facts cannot be alleged - Held that: - relying on the Code of Ethics and Rules provided by the appellant, ld. Adjudicating authority has arrived at the conclusion that the services provided by the appellant confirmed to the definition of 'Franchise Service' for the purpose of levy of Service Tax. The consistent position of law with regard to applicability of the proviso to Section 73(1)/Section 11A ibid has been that suppression cannot be established where material facts were within the knowledge of the Revenue. Accordingly, where there is no suppression, the pre-condition for applicability of proviso to Section 73(1) cannot be said to be met and hence, extended period of limitation contemplated therein cannot be invoked - In the case in hand, since the modus operandi adopted by the appellant for selling its products were known to the Department and based on the information/documents furnished by the appellant in 2005, the show cause proceedings were initiated by the Department on 12.03.2009, seeking confirmation of service tax demand under 'Franchise Service' for the period October' 2003 to March' 2007, we are of the considered view that the proceedings are barred by limitation of time - the appeal should succeed on the ground of limitation. Whether service tax amounting to ₹ 1,60,68,000/- under 'Business Auxiliary Service' and ₹ 46,08,759/- on 'Intellectual Property Right Service' under reverse charge mechanism are required to be demanded along with interest? - Held that: - It is an admitted fact on record that the amount of ₹ 7,38,61,083/- and ₹ 23,24,00,000/-, reflected in the books of accounts of appellant as outstanding as on 10.05.2008, were towards services received from abroad from the associated companies. Since on the date of amendment of Section 67 ibid and Rule 6 ibid, such amounts were reflected under outstanding receipts, the appellant is liable to pay service tax on such amount under reverse charge mechanism as per Section 66A ibid - service tax amounting to ₹ 46,08,759/- and ₹ 1,60,68,000/- paid by the appellant and appropriated in the impugned order are in conformity with the service tax statute - Since, the appellant had delayed in making such payment, interest amount thereon are required to be paid, since the same is compensatory in character. Appeal disposed off - decided partly in favor of appellant.
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