2023 (6) TMI 901 - CESTAT MUMBAI

Levy of Service Tax - Business Support Service - corporate commission given by the appellant herein to its holding company abroad i.e. M/s. Thyssenkrupp, Germany - suppression of facts - extended period of limitation - HELD THAT:- With effect from 1.7.2012 section 66B(44), Finance Act, 1994 defined “service” as “any activity carried out by a person for another for consideration and includes a declared service”. There is nothing wrong in the findings of the authorities below that ‘commission’ per se would fall under the ambit of the definition of ‘service’ (supra). After 1.7.2012 once the activity falls within the definition of ‘service’ it is taxable and the fact that some wrong classification by revenue has been given to it, is not of much help of the assessee as prior to 1.7.2012 services were distinguished under different categories u/s. 65(105) ibid and service tax was charged u/s. 66 therein but w.e.f. 1.7.2012 section 66 ibid was replaced by section 65B ibid for charging service tax.

Admittedly the appellant had deposited the duty immediately after being pointed out by the audit which, in the facts of this case, strengthens the stand of the appellant that there was no willful or deliberate suppression on their part. So far as the period 2013-14 is concerned the duty is demanded after invoking the extended period of limitation by attributing willful suppression on the part of the appellant. Suppression etc. cannot be imputed against the appellant merely because they failed to pay the tax on time. It is settled legal position that mere allegation of suppression is not sufficient, it has to be established through some evidence as mere omission to give some information will not always be termed as suppression with intention to evade tax, something more needs to be brought on record by the department.

Admittedly the appellant was under obligation to discharge service tax under reverse charge mechanism on the commission paid for corporate guarantee provided by its parent company and if any service was taxed under reverse charge mechanism, they will be entitled to the benefit of Cenvat credit of the service tax paid. Therefore, the entire exercise is revenue neutral. In such a situation this Tribunal in the matter of JET AIRWAYS (I) LTD. VERSUS COMMISSIONER OF SERVICE TAX MUMBAI [2016 (8) TMI 989 - CESTAT MUMBAI] has held that in view of the fact that the demand is completely revenue neutral, extended period of limitation cannot be invoked and therefore I am of the considered view that the demand for the period 2013-14 is hit by limitation and accordingly set aside.

The appeal is partially allowed so far as the period 2013-14 is concerned and for the period 2014-15 the same is remanded for the purpose of calculation of duty for the normal period alongwith interest, if any.