1. ISSUES PRESENTED and CONSIDERED

• Whether the fees received by a cricket player from a franchisee for playing in Indian Premier League (IPL) matches constitute taxable services under the category of 'Business Auxiliary Services' (BAS) for service tax purposes.
• Whether the display of brand names/logos of sponsors on the player's clothing and the player's role as a brand ambassador/promoter attract liability to service tax under BAS.
• Whether the contractual terms and nature of payments made to the player reflect a composite service including promotional activities or solely remuneration for playing cricket.
• Whether existing precedents and legal principles support the classification of payments to players as BAS or exclude them from such categorization.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Taxability of fees received by a cricket player under 'Business Auxiliary Services'

Relevant legal framework and precedents: The category of 'Business Auxiliary Services' under service tax law covers services that support or facilitate business activities, including promotion, marketing, or sale of goods or services. The Tribunal's earlier decisions in cases involving cricket players (Devraj Patil, Bharat Chipli, Anil Kumble, Sourav Ganguly, Swapnil Asnodkar, B. Akhil) have addressed whether payments to players for participation in IPL matches attract service tax under BAS.

Court's interpretation and reasoning: The Tribunal examined the nature of the contractual relationship and payments. The player's remuneration, termed 'player fee,' is explicitly for playing cricket, as evidenced by contract clauses reducing fees if the player is unavailable. This indicates the payment is consideration solely for participation in sport, not for promotional or marketing services.

Key evidence and findings: The contract between the player and franchisee does not impose any obligation on the player to render marketing or promotional services. The player's role as a promoter or brand ambassador is not contractually recognized as a service rendered to the franchisee. The player's fees are distinct from any brand promotion activities.

Application of law to facts: The Tribunal applied the principle that composite contracts involving both taxable and non-taxable components require clear segregation to levy service tax. Absent any machinery or method to apportion the value attributable to promotional services, the entire fee cannot be taxed under BAS. The player's remuneration for playing cricket is not a taxable service under BAS.

Treatment of competing arguments: The Revenue argued that the display of brand names on players' clothes and their role as brand ambassadors constitute taxable BAS. However, the Tribunal rejected this, relying on prior rulings that distinguished between payments for playing and payments for brand promotion. The Tribunal noted that franchisees have separate agreements with corporate sponsors, and players cannot be doubly taxed for promotional services.

Conclusions: The Tribunal concluded that fees paid to players for playing cricket in IPL matches do not fall under 'Business Auxiliary Services' and are not liable to service tax under this category.

Issue 2: Liability for service tax due to brand promotion by players

Relevant legal framework and precedents: Service tax liability arises if a player renders services as a brand ambassador promoting goods or services of a third party. The classification of such services is distinct from BAS and falls under 'Brand Ambassador' services, which require separate registration and tax compliance.

Court's interpretation and reasoning: The Tribunal referred to the appellant's submission and prior case law (notably Sourav Ganguly's case) where it was clarified that players who act as brand ambassadors for goods/services must register and pay service tax under the 'Brand Ambassador' category. However, in IPL contexts, players do not have direct agreements with sponsors; such agreements are held by franchisees.

Key evidence and findings: The appellant had obtained service tax registration under the 'Brand Ambassador' category for any such services rendered outside the IPL franchise context. No evidence was found that the player received separate consideration for brand promotion from the franchise or sponsors.

Application of law to facts: Since the player's contract with the franchisee does not include brand promotion services and the player's remuneration is solely for playing, the display of brand logos on clothing does not automatically render the player liable to service tax under BAS. The franchisee's agreements with sponsors cover promotional activities, and the player's role is incidental.

Treatment of competing arguments: The Revenue's contention that brand display equates to BAS was countered by the Tribunal's reliance on the principle against double taxation and the absence of contractual promotional obligations on players.

Conclusions: The Tribunal held that brand promotion by players under IPL contracts does not attract service tax under BAS, and any brand ambassador services must be separately registered and taxed if applicable.

Issue 3: Interpretation of composite contracts and taxability

Relevant legal framework and precedents: The law requires clear identification and valuation of taxable components in composite contracts. If no method exists to segregate taxable and non-taxable services, the entire contract cannot be taxed. This principle was reiterated in the Tribunal's decisions and is a settled legal norm.

Court's interpretation and reasoning: The Tribunal found that the player's contract is a composite contract for playing cricket, with no separate valuation or consideration for promotional services. The absence of machinery to exclude non-taxable services from the composite fee renders the levy of service tax invalid.

Key evidence and findings: Contract clauses reducing player fees if unavailable for matches confirm that the fee is linked solely to playing services. No documentary evidence was produced to show separate payments for promotion or marketing.

Application of law to facts: The Tribunal applied the principle that vagueness or absence of apportionment in composite contracts makes the service tax levy unsustainable.

Treatment of competing arguments: The Revenue's assumption that the fee was composite and fully taxable was rejected due to lack of evidentiary support and legal precedent.

Conclusions: The Tribunal concluded that the demand for service tax on the entire player fee under BAS is unsustainable and set aside the impugned order.

1. ISSUES PRESENTED and CONSIDERED

• Whether the activity of rehabilitation of breakwaters constitutes a 'works contract' liable to tax under the Finance Act, 1994, or is exempt under notification no. 25/2012-ST dated 20th June 2012.
• Interpretation of the expression 'by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration' in the exemption notification and its applicability to the activity of breakwater rehabilitation.
• Determination of the value of taxable service in the absence of declared value by the appellant, including the use of income tax returns data and the applicability of section 72 and section 73 of the Finance Act, 1994.
• Whether the breakwater structure qualifies as 'civil structure' intended for use other than commerce, industry, or any other business or profession, thereby entitling the activity to exemption.
• Whether the difference between income tax returns and service tax returns can be used as a basis for demand under section 73 of the Finance Act, 1994.
• Applicability of precedent decisions and advance rulings concerning the classification and exemption of breakwater-related works.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Classification of the activity as 'works contract' and applicability of exemption notification

Relevant legal framework and precedents: The Finance Act, 1994, governs service tax liability, with section 73 providing for determination of tax demand and section 75 for interest. Notification no. 25/2012-ST exempts certain works contracts provided to government authorities, subject to specified conditions. The definition of 'works contract' includes activities involving construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration.

Court's interpretation and reasoning: The Tribunal acknowledged that the activity undertaken was a 'works contract' rendered to a governmental authority. The adjudicating authority had held that the rehabilitation of breakwaters was not covered by the exemption notification, reasoning that the activity was not exactly 'by way of' any of the enumerated activities in serial no. 12A of the notification. However, the Tribunal found this interpretation flawed, noting that the adjudicating authority placed undue emphasis on the phrase 'by way of' without adequate semantic or legal justification.

Key evidence and findings: The appellant undertook rehabilitation of breakwaters awarded by the Department of Ports and Inland Water Transport, Government of Karnataka. The appellant contended that the work was excluded from taxation under the exemption notification and no tax was collected from the contract awarding authority.

Application of law to facts: The Tribunal observed that the expression in the exemption notification was intended to circumscribe the exclusion narrowly, limiting it to civil structures predominantly for non-commercial, non-industrial, or non-business use. The breakwater, by its nature, serves to protect the coastline and port infrastructure, not for commerce or industry, thus falling within the exemption scope.

Treatment of competing arguments: The adjudicating authority's narrow interpretation was contrasted with prior decisions, including the dropping of proceedings in similar cases and advance rulings recognizing exemption for such works. The appellant's reliance on these precedents was accepted as supportive of exemption.

Conclusions: The Tribunal concluded that the activity of rehabilitating breakwaters qualifies as a 'works contract' exempt under the notification, and the impugned order erred in denying this exemption.

Issue 2: Interpretation of the phrase 'by way of' in the exemption notification

Relevant legal framework and precedents: The exemption notification uses the phrase 'by way of' to describe the nature of works contracts eligible for exemption. Interpretation principles require contextual and purposive reading of such expressions.

Court's interpretation and reasoning: The Tribunal found that the adjudicating authority's emphasis on 'by way of' was misplaced. The phrase was intended to limit the exclusion to a specific activity among the enumerated ones, not to restrict all activities listed. The Tribunal held that the breakwater rehabilitation falls within the enumerated activities, particularly 'repair, maintenance, renovation or alteration' of civil structures.

Key evidence and findings: The nature and purpose of breakwaters as civil structures protecting coastal infrastructure were highlighted. The Tribunal noted that the breakwater is not constructed for commercial or industrial use, supporting the exemption claim.

Application of law to facts: The phrase 'by way of' was interpreted to support exemption rather than deny it, given the purpose and nature of the breakwater works.

Treatment of competing arguments: The adjudicating authority's restrictive interpretation was rejected in favor of a broader purposive approach consistent with the exemption's intent.

Conclusions: The Tribunal held that the phrase 'by way of' does not exclude the rehabilitation of breakwaters from the exemption notification.

Issue 3: Determination of value of taxable service and use of income tax returns data

Relevant legal framework and precedents: Section 72 of the Finance Act, 1994, allows the adjudicating authority to determine the value of taxable service in the absence of declared value. Section 73 provides for determination of tax demand. Precedents establish that differences between income tax returns and service tax returns are not a proper basis for demand under section 73.

Court's interpretation and reasoning: The adjudicating authority relied on income tax returns to determine the value of taxable service, citing discrepancies and absence of declared value by the appellant. The Tribunal noted that the use of income tax returns for this purpose is improper, especially given settled precedents rejecting such cross-referencing as a basis for demand under section 73.

Key evidence and findings: The appellant had not reported the value under service tax but had reported receipts in income tax returns. The adjudicating authority used these figures to quantify demand.

Application of law to facts: The Tribunal applied established legal principles that the difference between income tax and service tax returns cannot be used to determine demand under section 73 and that section 72 proceedings are independent and cannot be conflated.

Treatment of competing arguments: The respondent's reliance on income tax returns as indicative of value was rejected in light of legal precedents and principles of proper valuation under the Finance Act.

Conclusions: The Tribunal held that the valuation method adopted by the adjudicating authority was flawed and could not sustain the demand.

Issue 4: Qualification of breakwater as 'civil structure' and its use for commerce, industry or business

Relevant legal framework and precedents: The exemption notification applies to works contracts relating to 'civil structures' predominantly used other than for commerce, industry, or any other business or profession. Prior rulings and judicial decisions provide guidance on classification of breakwaters and related structures.

Court's interpretation and reasoning: The Tribunal emphasized the functional purpose of breakwaters-to resist wave action and protect coastal and port infrastructure. It rejected the notion that breakwaters serve commercial or industrial purposes directly. The Tribunal referred to relevant authority that held breakwaters do not qualify as 'plant and machinery' and are not used for outward supply of goods or services.

Key evidence and findings: The nature of breakwaters and their protective function was established. The appellant's work was limited to rehabilitation, not construction for commercial use.

Application of law to facts: The Tribunal applied the exemption criteria strictly, concluding that breakwaters fall within 'civil structures' used other than for commerce, industry, or business.

Treatment of competing arguments: The adjudicating authority's failure to consider the purpose and nature of breakwaters was criticized. The appellant's submissions and supporting precedents were accepted.

Conclusions: The Tribunal concluded that the breakwater rehabilitation work qualifies for exemption as it relates to civil structures not used for commerce, industry, or business.

Issue 5: Use of precedent decisions and advance rulings

Relevant legal framework and precedents: Prior decisions, including the dropping of proceedings in similar cases and advance rulings by authorities, provide persuasive guidance on the classification and exemption of breakwater-related works.

Court's interpretation and reasoning: The Tribunal relied on the decision of the Commissioner of Central Excise & GST, Thane Rural, which dropped proceedings in a similar case involving the Maharashtra Maritime Board. It also considered the Authority for Advance Ruling in Maharashtra, which held similar works exempt. Additionally, the Tribunal referred to the Bombay High Court's ruling on classification of breakwaters and denial of input tax credit eligibility, reinforcing the non-commercial nature of breakwaters.

Key evidence and findings: The appellant's reliance on these precedents was supported by factual similarity and legal reasoning consistent with exemption.

Application of law to facts: The Tribunal found these precedents directly applicable and supportive of the appellant's claim for exemption.

Treatment of competing arguments: The respondent did not effectively counter these precedents; the Tribunal found the precedents persuasive.

Conclusions: The Tribunal accepted the precedents as authoritative and consistent with the appellant's position, reinforcing the grant of exemption.

Issue 6: Legality of demand and penalty imposition under the Finance Act, 1994

Relevant legal framework and precedents: Sections 73, 75, 77, and 78 of the Finance Act, 1994, govern tax demand, interest, and penalties for non-compliance.

Court's interpretation and reasoning: Given the Tribunal's findings that the activity was exempt and valuation was improperly determined, the demand of tax, interest, and penalties were unsustainable.

Key evidence and findings: The impugned order confirmed tax demand and penalties based on erroneous classification and valuation.

Application of law to facts: The Tribunal applied the principle that demand and penalties cannot be sustained if the foundational tax liability is invalid.

Treatment of competing arguments: The respondent's justification for demand and penalties was premised on flawed findings, which the Tribunal rejected.

Conclusions: The Tribunal set aside the impugned order, quashing the demand and penalties.

1. ISSUES PRESENTED and CONSIDERED

• Whether Indian banks acting on behalf of exporters are recipients of services provided by foreign banks in export transactions involving transfer/exchange of documents and transfer of money.
• Whether Indian banks are liable to pay service tax under the Reverse Charge Mechanism (RCM) on foreign bank charges deducted by foreign correspondent or intermediary banks.
• Whether the value of foreign bank charges deducted at source forms part of the taxable value for service tax purposes under the Finance Act, 1994.
• The applicability and interpretation of relevant provisions of the Finance Act, 1994, including Sections 66B, 67, 68, 73, 76, and 77, in the context of banking and financial services related to export transactions.
• The legal effect and binding nature of departmental Trade Notices and interim Tribunal orders relied upon by the Revenue.
• The interpretation of "consideration" and its nexus with taxable services in determining service tax liability.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 and 2: Whether Indian banks are recipients of services provided by foreign banks in export transactions and liable to pay service tax under RCM on foreign bank charges

Relevant legal framework and precedents:

The Finance Act, 1994, defines taxable services including "Banking and Other Financial Services" under Chapter V. Section 66B mandates service tax on specified services. Section 68 and 73 relate to demand and recovery of service tax, while Sections 76 and 77 provide for penalty provisions. Section 67 governs the valuation of taxable services, requiring that service tax be levied on the gross amount charged for the taxable service provided for a consideration. The Reverse Charge Mechanism (RCM) imposes tax liability on the service recipient in certain cases.

Key precedents include:

• State Bank of Bikaner & Jaipur v. Commissioner of Central Excise & Service Tax (Tribunal decision): Held Indian banks are not recipients of services provided by foreign banks in export transactions and thus not liable under RCM.
• Madras High Court in BGR Energy Systems Ltd. v. Addl. Commissioner of GST & C. Ex.: Affirmed that Indian banks act as agents for exporters and are not recipients of foreign bank services; the exporter is the service recipient liable for service tax.
• Supreme Court decisions in Union of India v. Intercontinental Consultants and Technocrats and Commissioner of Service Tax v. Bhayana Builders: Clarified that "consideration" must flow from the service recipient to the service provider and must relate directly to the taxable service provided.

Court's interpretation and reasoning:

The Tribunal examined the nature of export transactions involving Indian banks facilitating remittances and exchange of documents. It was noted that foreign banks deduct charges at source before remitting net amounts to Indian banks. The Indian banks act as agents for exporters and do not receive or pay consideration to foreign banks for any service.

The Tribunal relied on the protocols URC 522 and UCP 600 governing international trade banking transactions, which establish the roles and obligations of exporters, importers, and their banks.

The Tribunal held that the Indian banks do not receive any service from foreign banks; rather, they facilitate services on behalf of exporters. Consequently, Indian banks cannot be considered recipients of foreign bank services for RCM liability.

Key evidence and findings:

• Exporters instruct Indian banks to send documents and collect payments; Indian banks charge exporters commission and pay service tax on such services.
• Foreign banks deduct charges directly from export proceeds before remitting to Indian banks; Indian banks do not pay or reimburse these charges.
• No contractual relationship or agreement exists between Indian banks and foreign banks for these deducted charges.
• Trade Notice No. 20/2013-14-ST-I dated 10.02.2014, relied upon by Revenue, was found to be based on interim Tribunal orders and not binding.

Application of law to facts:

Applying Section 67's requirement that service tax be levied only on consideration paid for taxable services, the Tribunal concluded that since Indian banks do not pay consideration to foreign banks, no taxable service is received by them. The foreign bank charges deducted at source are not part of the taxable value for Indian banks.

The Tribunal also distinguished between "conditions" to contracts and "consideration" for taxable services, emphasizing that mere deductions or expenses not constituting consideration cannot form part of the taxable value.

Treatment of competing arguments:

The Revenue argued that Indian banks are recipients of foreign bank services and liable under RCM, relying on the Trade Notice and interim Tribunal orders. The Tribunal rejected this, noting the Trade Notice's non-binding nature and reliance on interim orders. The Tribunal also cited the Madras High Court decision, which held exporters liable, not Indian banks.

Conclusions:

Indian banks acting on behalf of exporters are not recipients of foreign bank services in export transactions. They are not liable to pay service tax under RCM on foreign bank charges deducted by foreign correspondent or intermediary banks. The service tax liability, if any, lies with the exporter who bears the expenditure.

Issue 3: Whether foreign bank charges deducted at source form part of taxable value under Section 67 of the Finance Act, 1994

Relevant legal framework and precedents:

Section 67(1) of the Finance Act requires valuation of taxable services to be based on the gross amount charged for such service provided for consideration. The Explanation to Section 67(1) defines "consideration" as any amount payable for taxable services or reimbursable expenditure.

Supreme Court rulings in Commissioner of Service Tax v. Bhayana Builders and Union of India v. Intercontinental Consultants and Technocrats clarified that only amounts paid as consideration for taxable services are includible in valuation, and that conditions to a contract are distinct from consideration.

Court's interpretation and reasoning:

The Tribunal emphasized that the foreign bank charges deducted at source do not constitute consideration paid by the Indian banks for any taxable service. The Indian banks do not receive or pay these charges; rather, they are borne by the exporters.

Therefore, such deductions cannot be included in the taxable value of services provided by Indian banks or foreign banks to Indian banks.

Key evidence and findings:

• Indian banks do not remit or reimburse foreign bank charges; these are deducted before remittance.
• There is no flow of consideration from Indian banks to foreign banks.
• Exporters bear the cost of foreign bank charges as part of their export proceeds realization.

Application of law to facts:

Since no consideration flows from Indian banks to foreign banks, and the charges are borne by exporters, the foreign bank charges deducted at source are not includible in the taxable value of services for Indian banks under Section 67.

Treatment of competing arguments:

Revenue's reliance on Trade Notice and interim orders to treat Indian banks as service recipients and include foreign bank charges in taxable value was rejected based on binding precedents and statutory interpretation.

Conclusions:

Foreign bank charges deducted at source do not form part of the taxable value of services for Indian banks under Section 67 of the Finance Act, 1994.

Issue 4: Applicability and binding nature of departmental Trade Notices and interim Tribunal orders

Relevant legal framework and precedents:

Departmental Trade Notices are administrative instructions and do not have the force of law. Courts and Tribunals are not bound by such circulars or notices. Interim orders passed by Tribunals are not final and may be subject to review or reversal.

Supreme Court in Commissioner of Central Excise, Bhopal v. Minwool Rock Fibres Ltd. held departmental circulars are not binding on assessees or quasi-judicial authorities.

Court's interpretation and reasoning:

The Tribunal observed that the Trade Notice dated 10.02.2014 relied upon by Revenue is based on interim orders and prima facie views, not final decisions. It is not binding on the appellants or the Tribunal.

Key evidence and findings:

• Trade Notice relied on interim orders from other Benches.
• Subsequent final orders and High Court decisions contradicted the views expressed in the Trade Notice.

Application of law to facts:

The Tribunal declined to give effect to the Trade Notice for determining liability, relying instead on binding judicial precedents and final Tribunal decisions.

Treatment of competing arguments:

Revenue's reliance on the Trade Notice and interim orders was rejected as not legally sustainable.

Conclusions:

Departmental Trade Notices and interim Tribunal orders do not bind the Tribunal or the assessees and cannot be relied upon to impose service tax liability contrary to settled law.

Issue 5: Interpretation of "consideration" and nexus with taxable services for service tax valuation

Relevant legal framework and precedents:

Section 67 and its Explanation define "consideration" as amount payable for taxable services. Supreme Court rulings clarified that consideration must flow from service recipient to provider and relate directly to the taxable service.

Court's interpretation and reasoning:

The Tribunal reiterated that consideration must have a direct nexus with the taxable service provided. Mere contractual conditions or deductions not constituting consideration cannot be included in taxable value.

Key evidence and findings:

• No consideration flows from Indian banks to foreign banks for foreign bank charges.
• Indian banks act as agents for exporters and do not receive services for which they pay consideration.

Application of law to facts:

Foreign bank charges deducted at source do not constitute consideration for taxable services by Indian banks and hence are not includible in valuation.

Treatment of competing arguments:

Revenue's argument that foreign bank charges form part of taxable value was rejected based on statutory interpretation and judicial precedents.

Conclusions:

Only amounts paid as consideration for taxable services form part of taxable value under Section 67; foreign bank charges deducted at source do not qualify.

Overall Conclusion:

Indian banks providing banking and financial services in export transactions are not recipients of services from foreign banks and are not liable to pay service tax under RCM on foreign bank charges deducted at source. The foreign bank charges are borne by exporters and do not form part of taxable value for Indian banks. Departmental Trade Notices and interim orders relied upon by Revenue do not override settled judicial precedents. The impugned demand, interest, and penalties imposed on Indian banks are set aside as legally unsustainable.

1. ISSUES PRESENTED and CONSIDERED

• Whether the appeals were filed within the statutory limitation period prescribed under Section 85(3) of the Finance Act, 1994.
• Determination of the exact date of receipt of the Orders-in-Original (OIO) by the appellant for the purpose of computing limitation.
• Whether the delay in filing the appeals beyond the initial three months period could be condoned under the proviso to Section 85(3) of the Finance Act, 1994.
• Interpretation and application of the provisions of Section 9 and Section 3(35) of the General Clauses Act, 1897 in computing the limitation period.
• Assessment of evidentiary value of departmental records and acknowledgments regarding the date of receipt of the orders.
• Scope and exercise of discretion by the Commissioner (Appeals) in condoning delay beyond the statutory period.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Whether the appeals were filed within the statutory limitation period prescribed under Section 85(3) of the Finance Act, 1994

- Legal Framework: Section 85(3) mandates that an appeal must be presented within three months from the date of receipt of the adjudicating authority's order, with a further period of three months allowed for condonation of delay by the Commissioner (Appeals) upon sufficient cause.

- Court's Interpretation and Reasoning: The limitation period is strictly prescribed and the appeal filed beyond six months (three months plus three months condonation) is liable to be dismissed on grounds of limitation.

- Key Evidence and Findings: Departmental records and acknowledgments indicate receipt of Orders-in-Original on 13.06.2011, while appellant claims receipt on 15.06.2011 based on inscriptions on the order and related documents.

- Application of Law to Facts: If 13.06.2011 is the date of receipt, the last date for filing appeal without condonation is 13.09.2011 and with condonation is 13.12.2011. The appeal filed on 15.12.2011 exceeds this period. If 15.06.2011 is accepted, the appeal falls within the condonable period.

- Treatment of Competing Arguments: The department relies on dated acknowledgments dated 13.06.2011; appellant challenges the authenticity and argues physical impossibility of receipt on that date and reliance on the date "15.06.2011" inscribed on the order.

- Conclusion: Determination of the correct date of receipt is critical to deciding limitation; the matter requires remand for factual verification.

Issue 2: Determination of the exact date of receipt of the Orders-in-Original (OIO) by the appellant for limitation computation

- Legal Framework and Precedents: The date of receipt is the triggering point for limitation under Section 85(3). The General Clauses Act, 1897, Sections 3(35) and 9, govern the computation of months and exclusion of the first day.

- Court's Interpretation and Reasoning: The Court recognized the conflicting dates (13.06.2011 vs. 15.06.2011). The inscription "DOR 15.06.2011" on the order and Form ST-4 supports appellant's claim. Departmental letter dated 03.01.2012 claims receipt on 13.06.2011 but lacks dated acknowledgment signatures. The Court noted absence of evidence that appellant's authorized signatory physically collected the orders on 13.06.2011.

- Key Evidence and Findings: Letters dated 13.06.2011 enclosing orders bear signature without date; no affidavit or direct evidence identifying the recipient or exact date of receipt. The appellant's new management unable to identify the person who acknowledged receipt due to company takeover and staff turnover.

- Application of Law to Facts: Given the ambiguity and lack of conclusive evidence, the Court held that the date of receipt must be ascertained by the Commissioner (Appeals) on remand by examining departmental records.

- Treatment of Competing Arguments: The appellant's argument that the date on the order (15.06.2011) should be accepted as receipt date was found plausible; the department's reliance on undated acknowledgments was insufficient to conclusively fix 13.06.2011 as receipt date.

- Conclusion: The exact date of receipt is a factual question requiring further inquiry; the matter is remanded for determination of the correct date of receipt.

Issue 3: Whether the delay in filing appeals beyond the initial three months could be condoned under proviso to Section 85(3)

- Legal Framework and Precedents: The proviso to Section 85(3) empowers the Commissioner (Appeals) to condone delay up to an additional three months if sufficient cause is shown. The limitation period is thus six months maximum.

- Court's Interpretation and Reasoning: The Court emphasized that condonation beyond the further three months is not permissible. The Commissioner (Appeals) must exercise discretion based on facts and reasons presented.

- Key Evidence and Findings: The appellant filed the appeal on 15.12.2011 with an application for condonation of delay. If the date of receipt is 15.06.2011, the appeal was within the condonable period; if 13.06.2011, it was beyond.

- Application of Law to Facts: The Court held that the Commissioner (Appeals) must re-examine the matter after ascertaining the correct receipt date and then decide on condonation by reasoned order.

- Treatment of Competing Arguments: Department argued that the appeal was filed beyond six months and delay was not condonable; appellant contended delay was within permissible period and condonation should be granted.

- Conclusion: Discretion to condone delay arises only if appeal is within six months; remand required for fresh exercise of discretion after receipt date determination.

Issue 4: Interpretation and application of Sections 9 and 3(35) of the General Clauses Act, 1897 in computing limitation

- Legal Framework and Precedents: Section 3(35) defines "month" as calendar month reckoned according to the British calendar; Section 9 excludes the first day in computing time periods. Apex Court rulings clarify that three months expire on the corresponding date in the third month.

- Court's Interpretation and Reasoning: The Court applied these principles to compute limitation periods, excluding the date of receipt and counting calendar months accurately.

- Key Evidence and Findings: The appellant's computation of limitation starting from 16.06.2011 (excluding 15.06.2011) was consistent with these provisions.

- Application of Law to Facts: The Court recognized that the limitation period must be computed strictly per these provisions, affecting the final permissible date for filing appeals and condonation applications.

- Treatment of Competing Arguments: Department's calculation was slightly different but aligned with the legal principles; the dispute centered on the date of receipt rather than method of computation.

- Conclusion: Computation of limitation must follow Sections 9 and 3(35) of the General Clauses Act; this principle was accepted and applied.

Issue 5: Assessment of evidentiary value of departmental records and acknowledgments regarding date of receipt

- Legal Framework: Acknowledgments and official correspondence serve as prima facie evidence of receipt dates; however, authenticity and completeness are critical.

- Court's Interpretation and Reasoning: The Court scrutinized the letter dated 03.01.2012 and accompanying letters dated 13.06.2011, noting absence of dated signatures confirming receipt by authorized person. The Court found departmental evidence insufficiently conclusive.

- Key Evidence and Findings: Letters enclosing orders had signature of authorized signatory but without date; no affidavit or direct evidence of physical receipt on 13.06.2011 was produced.

- Application of Law to Facts: The Court observed that absence of clear acknowledgment undermined the department's claim; the appellant's claim based on inscription on orders was credible.

- Treatment of Competing Arguments: Department relied on internal letters as proof; appellant challenged the credibility and physical possibility of receipt on that date.

- Conclusion: Departmental records alone were inadequate to conclusively establish receipt date; further inquiry required.

Issue 6: Scope and exercise of discretion by Commissioner (Appeals) in condoning delay beyond statutory period

- Legal Framework and Precedents: The Commissioner (Appeals) has limited discretion to condone delay up to three months beyond initial three months period under Section 85(3). Delay beyond six months cannot be condoned.

- Court's Interpretation and Reasoning: The Court recognized that the Commissioner (Appeals) must consider sufficient cause and exercise discretion through reasoned orders. The Court remanded the matter for fresh exercise of discretion after determining the correct receipt date.

- Key Evidence and Findings: Appellant submitted grounds for condonation delay; however, the Commissioner (Appeals) rejected the appeal on limitation without detailed discussion of sufficient cause due to acceptance of 13.06.2011 as receipt date.

- Application of Law to Facts: The Court held that if receipt date is 15.06.2011, the appeal is within condonable period and discretion must be exercised on merits.

- Treatment of Competing Arguments: Department argued delay was beyond condonable period; appellant argued for condonation based on facts and legal principles.

- Conclusion: Discretion to condone delay must be exercised after factual determination of receipt date; remand directed for reasoned consideration.

1. ISSUES PRESENTED and CONSIDERED

Whether the activities undertaken by the appellant fall under works contract service or site formation and clearance, excavation, earthmoving and demolition services for the purpose of service tax liability.

Whether the demand of service tax raised by the Revenue invoking extended period of limitation is valid in the facts of the case.

Whether there was any suppression, collusion, or mis-statement by the appellant to justify invocation of extended period of limitation.

Whether absence of executed contract agreement affects the classification of the service and the liability to pay service tax.

Whether the appellant's failure to submit recipient-wise details and relevant documents justifies the demand and penalties imposed.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Classification of Service - Works Contract Service vs. Site Formation and Clearance, Excavation, Earthmoving and Demolition Services

Relevant Legal Framework and Precedents: The classification of services under service tax law depends on the nature of the activity and the contractual terms. Works contract service involves a composite contract for construction, fabrication, or erection involving supply of materials and labor. Site formation and clearance, excavation, earthmoving and demolition services are distinct categories under service tax.

Court's Interpretation and Reasoning: The Tribunal examined the work orders and related documents. Work orders indicated supply of materials such as cement concrete with specific rates quoted, implying involvement of materials inseparable from the work. Although the formal contract agreement was not executed or produced, the work orders stated that the contract agreement was under preparation, which is common in government or public sector contracts where tenders are finalized and formal agreements follow work orders.

Key Evidence and Findings: Presence of VAT payment records and worksheets showing break-up of taxable sales and purchases supported the involvement of materials. No evidence suggested that the work was purely service without material supply.

Application of Law to Facts: The Tribunal held that the absence of a formal contract agreement does not negate the nature of the service. The facts indicated a composite contract involving materials and labor, consistent with works contract service.

Treatment of Competing Arguments: The Revenue argued that no agreement was produced and the work orders mentioned contract agreement under preparation. The appellant argued that the service was works contract service and hence liable under that category. The Tribunal found the appellant's argument reasonable given the nature of the work and supporting documents.

Conclusions: The service undertaken by the appellant is classified as works contract service and not under site formation and clearance, excavation, earthmoving and demolition services.

Issue 2: Validity of Demand Invoking Extended Period of Limitation

Relevant Legal Framework and Precedents: Extended period of limitation under service tax law can be invoked only if there is evidence of suppression of facts or intent to evade tax. Audit-based detection without evidence of suppression does not justify extended period invocation. The Tribunal relied on authoritative precedents establishing that audit-based cases are subject to normal limitation period.

Court's Interpretation and Reasoning: The case originated from an audit of the public sector undertaking's records, which are in the public domain. The appellant had submitted statutory documents and there was no evidence of suppression or collusion.

Key Evidence and Findings: No evidence was brought forward by the Revenue to prove suppression, mis-statement, or collusion by the appellant. The demand was based on audit findings and statutory documents.

Application of Law to Facts: Since the case was detected through audit and no evidence of suppression was found, invocation of extended period of limitation was not justified.

Treatment of Competing Arguments: The appellant contended that the demand was barred by limitation and no suppression was involved. The Revenue contended that non-submission of recipient-wise details justified extended period. The Tribunal rejected the Revenue's contention due to lack of evidence of suppression.

Conclusions: The demand raised invoking extended period of limitation is barred and cannot be sustained.

Issue 3: Allegation of Suppression or Non-Submission of Documents

Relevant Legal Framework and Precedents: Suppression or concealment of facts with intent to evade tax is a precondition for invoking extended limitation and penalties. Mere non-submission of details without intent does not amount to suppression.

Court's Interpretation and Reasoning: The Tribunal noted that the appellant failed to submit recipient-wise details despite repeated requests. However, the appellant had submitted statutory documents and records maintained by the housing board were available to the Revenue.

Key Evidence and Findings: The Revenue did not produce any evidence of suppression or fraudulent intent. The appellant's records and the public documents were accessible to the Revenue.

Application of Law to Facts: Absence of recipient-wise details alone cannot be equated with suppression or evasion of tax liability.

Treatment of Competing Arguments: Revenue argued that non-submission justified demand and penalties. The appellant denied suppression and stated all relevant documents were submitted.

Conclusions: No suppression or intent to evade tax was established; hence, penalties and extended limitation are not justified on this ground.

Issue 4: Effect of Absence of Executed Contract Agreement on Service Classification and Tax Liability

Relevant Legal Framework and Precedents: Service classification depends on the substance of the contract and nature of work, not solely on the existence of a formal contract document.

Court's Interpretation and Reasoning: The Tribunal observed that the work order explicitly mentioned contract agreement was under preparation, a common practice in government contracts. The presence of material supply and VAT payment records indicated works contract service.

Key Evidence and Findings: Work orders, VAT payment records, and worksheets evidencing taxable sales and purchases.

Application of Law to Facts: Absence of formal contract agreement does not negate the nature of the service as works contract.

Treatment of Competing Arguments: Revenue argued absence of agreement undermined appellant's claim. The appellant emphasized the substance over form principle.

Conclusions: Absence of executed contract agreement does not affect classification of the service as works contract service.

Issue 5: Justification for Demand and Penalties Based on Non-Submission of Documents

Relevant Legal Framework and Precedents: Demand and penalties require proof of suppression, mis-statement, or evasion. Mere non-submission of documents without such intent is insufficient.

Court's Interpretation and Reasoning: The Tribunal found that although recipient-wise details were not submitted, the appellant had submitted other statutory documents and the records were available in public domain.

Key Evidence and Findings: No evidence of fraudulent intent or suppression was established by the Revenue.

Application of Law to Facts: Demand and penalties based solely on non-submission of details without suppression or evasion are not sustainable.

Treatment of Competing Arguments: Revenue sought to justify demand and penalties due to non-submission. The appellant denied suppression and argued for limitation bar.

Conclusions: Demand and penalties are not justified on the ground of non-submission of recipient-wise details in absence of suppression or evasion.

Overall Conclusion: The appeal is allowed solely on the ground of limitation as extended period cannot be invoked in audit-based cases without suppression. The classification of service as works contract is accepted. Demand and penalties are not sustainable due to lack of evidence of suppression or evasion. The case need not be remanded for merits as limitation alone decides the matter.

1. ISSUES:

1.1 Whether activities carried out fall within taxable "Works Contract Service" or other taxable services (including "Site formation and clearance, excavation and earthmoving and demolition Service", "Supply of Tangible Goods Service", "Man Power Recruitment or Supply Agency Service" and "Cleaning service") under the erstwhile Sec.66 / present Sec.66B of the Finance Act?

1.2 Whether construction or maintenance of roads (public or private) is excluded from the levy of service tax and/or covered by Notification No.24/2009-ST and retrospective amendment (Section 97) such that demands cannot be sustained?

1.3 Whether construction services rendered to educational institutions, hospitals and other charitable/non'profit entities are taxable where the recipients charge fees, and whether exemption applies irrespective of Section 12A/12AA registration?

1.4 Whether the extended period of limitation under the proviso to Section 73(1) of the Finance Act is invokable where returns were not filed, service tax was collected from recipients but not deposited, and there is alleged suppression or mala fides?

1.5 Whether Section 73A (obligation to pay amounts "collected" as service tax) applies where tax is collected from recipients and not deposited, and whether penalties under Sections 76, 77 and 78 are imposable?

1.6 Whether other specified activities (cleaning, manpower supply, supply of tangible goods, single residential units below threshold) are taxable or exempt under the statutory definitions and notifications.

2. RULINGS / HOLDINGS:

2.1 On classification of road works: The demand confirmed in respect of roads cannot sustain; "Construction of roads whether for public or private use is exempted from payment of service tax." The exclusion of roads from the statutory definition of commercial/industrial construction is dispositive.

2.2 On industrial/commercial construction: Construction of buildings and civil structures for industrial establishments are chargeable to service tax under "Works Contract Service" since there is transfer of property in goods involved and such works are "primarily for the purposes of commerce or industry".

2.3 On construction for educational institutions and hospitals run by trusts/charities: Exemption is available; constructions "used, or to be used" for educational, religious, charitable, health, sanitation or philanthropic purposes and not for purpose of profit are not taxable, and the exemption applies "whether the trusts and charities are registered or not under Section 12A / 12AA of the Income Tax Act, 1961".

2.4 On maintenance/repair of roads: Management, maintenance or repair of roads is exempt under Notification No.24/2009'ST and the retrospective amendment (Section 97) is applicable, so the demand for such services is to be set aside.

2.5 On other services not contested: Demands for cleaning service, manpower supply service, supply of tangible goods service and certain other works contract activities held in the impugned order are upheld as taxable and are not disturbed.

2.6 On extended period and collected tax: Invocation of the proviso to Section 73(1) for the extended five'year period is justified where there is non'filing of returns, collection of service tax from recipients and retention without deposit, and Section 73A applies since amounts "collected" must be paid "forthwith" to the Government; such conduct supports extended period and penalties.

2.7 On penalty quantification and remand: Penalty issues will be decided based on the quantum of service tax evaded, and the matter is remanded for determination of tax liability, interest and penalty after detailed verification of scope of works and amounts.

3. RATIONALE:

3.1 Statutory framework applied includes definitions and provisions in the Finance Act: the declared service concept (Section 66E(h)), the definitions of "Works Contract" and "Works contract service" (Section 65(105)(zzzza) / Section 65B), and the definition of "commercial or industrial construction" (Section 65(25b)). The service definition (post'1 July 2012) under Section 65(44) and interpretation provisions were also considered.

3.2 Exclusions and notifications relied upon include Notification No.24/2009'ST (exemption for management, maintenance or repair of roads) and the retrospective effect given by Section 97 (Finance Act, 2012) for periods from 16.06.2005; Notification No.17/2005'S.T. and circulars (CBIC Circular No. 80/10/2004 and Circular No.86/4/2006) informing the test of whether a structure is "used, or to be used" for commerce or industry were applied.

3.3 On roads: A "bare reading of the statutory provisions" shows roads are specifically excluded from works contract/ commercial construction definitions, and the tribunal followed prior judicial determinations that this exclusion does not distinguish between public or private roads; therefore, road construction/repair falls outside levy.

3.4 On educational/charitable recipients: The tribunal applied the test embodied in the circulars and statute that taxability depends on whether the building is "used, or to be used" "primarily for the purposes of commerce or industry"; mere collection of fees does not ipso facto render an institution a commercial concern unless surplus is diverted from charitable objectives.

3.5 On industrial constructions: Where the contract involves transfer of property in goods and the purpose is "primarily for the purposes of commerce or industry", such works are within the statutory definition of "Works Contract Service" and attract service tax.

3.6 On collection and deposit obligations: Section 73A imposes an immediate obligation to pay amounts collected as service tax "forthwith" to Government; retention after collection constitutes conduct supporting invocation of the proviso to Section 73(1) and sustains penalties where wilful non'deposit, suppression or mala fide intent is established.

3.7 On concurrent invocation of remedies: The tribunal held Section 73A and the proviso to Section 73(1) can be invoked simultaneously-Section 73A for collected amounts not deposited and the proviso to Section 73(1) where deliberate non'payment/non'filing and concealment justify extended limitation.

3.8 On scope of remand and verification: Determination of taxability of individual bill items (e.g., retaining walls, ramps, culverts, lorry yards, site preparation, kiln maintenance, hire charges) requires detailed examination of scope of work, contractual terms and whether activity is repair/maintenance, supply of goods, or works contract; quantum, interest and penalties to be computed on remand in light of these legal conclusions.

1. ISSUES PRESENTED and CONSIDERED

(1) Whether a demand for service tax based solely on figures extracted from Income Tax Return (ITR) / Form 26AS without independent departmental investigation or supporting documents is sustainable.

(2) Whether a Show Cause Notice (SCN) which does not specify the particular service for which demand is raised is maintainable.

(3) Whether supply of milk, as reflected in the ITR/computation, constitutes a taxable "service" or is a trading activity not subject to service tax.

(4) Whether the proviso to sub'section (1) of Section 73 (extended period) can be invoked on the basis of figures taken from public documents (ITR/Form 26AS) - i.e., whether there was suppression of facts with intent to evade payment of service tax.

(5) Whether calculation of service tax applying the higher rate for the entire disputed period without period'wise breakup is legally proper.

(6) Whether interest under Section 75 and penalties under Section 77(1)(C) and Section 78 can be sustained where the primary tax demand is held unsustainable or time'barred.

2. ISSUE'WISE DETAILED ANALYSIS

Issue (1): Sustainability of demand based solely on ITR / Form 26AS figures

- Relevant legal framework and precedents: Departmental demand procedures require proof of taxability and onus lies on the Department to establish specific findings on the taxability of the assessee's activities; third'party data (ITR/Form 26AS) is a public document but does not in itself determine tax liability without corroboration.

- Court's interpretation and reasoning: The Tribunal held that the demand was built merely on ITR/Form 26AS figures and that neither the SCN nor adjudicating authorities conducted an inquiry into the nature of the activities or produced supporting documents. The Tribunal emphasized that mere computation attached to ITR, without other documentary support or specific findings on taxability, is insufficient to sustain a demand.

- Key evidence and findings: The only material relied upon by the Department was the computation in the ITR/Form 26AS; the Commissioner (Appeals) had itself observed that the demand was determined on the basis of those figures "without support of any other documents."

- Application of law to facts: Given the absence of departmental investigation and lack of corroborative evidence linking the amounts to taxable services, the Tribunal found the Department failed to discharge its onus to establish taxability; hence the demand grounded solely on ITR computation was unsustainable.

- Treatment of competing arguments: The Department's reliance on third'party data was rejected as a standalone basis for demand. The Tribunal accepted the assessee's contention that additional documentary material (bank statements, explanations) showed that credits were not necessarily receipts for taxable services.

- Conclusion: Demand based only on figures in ITR/Form 26AS, without investigation and independent evidence of taxability, is not sustainable; the demand confirmed on that basis cannot stand.

Issue (2): Maintainability of SCN which fails to specify the service for which demand is raised

- Relevant legal framework and precedents: SCNs must disclose the case against the assessee with sufficient particularity so that the assessee can effectively meet the allegations; identification of the impugned service or taxable event is a basic requirement.

- Court's interpretation and reasoning: The Tribunal noted that nowhere in the SCN it was mentioned which particular service was sought to be taxed. The Tribunal held that an SCN that does not specify the service for which demand is raised is legally deficient and undermines the statutory requirement for a proper adjudicatory process.

- Key evidence and findings: The SCN and adjudication relied on an ITR computation purportedly showing "Sale of Service (ITR)" but did not articulate the nature of service or furnish evidence linking transactions to a specific taxable service.

- Application of law to facts: Because the SCN lacked specificity as to the taxable service, the Department could not be said to have made out a lawful case; the deficiency contributed to the unsustainability of the demand.

- Treatment of competing arguments: The Department's position that computation indicating "supply of milk" sufficed was rejected; the Tribunal declined to equate a label in computation with a proper allegation of service tax liability.

- Conclusion: SCN lacking specification of which service is taxed is not maintainable and cannot support a demand.

Issue (3): Whether supply of milk constitutes service or trading activity

- Relevant legal framework and precedents: Distinction between sale (trading) and provision of service is foundational - supply of goods in trade is not a "service" subject to service tax unless captured by statutory definitions.

- Court's interpretation and reasoning: The Tribunal accepted the submission that even if the computation showed turnover described as "supply of milk," that description alone does not convert a trading activity into a taxable service. The Tribunal emphasized the requirement for the Department to make specific findings on taxability and to demonstrate that the activity falls within the statutory definition of a taxable service.

- Key evidence and findings: Bank statements and transaction particulars were put forward by the assessee to show bona fide receipts (refunds, FD maturity, cancelled DD, policy maturity, CWC adjustments) rather than receipts for provision of a service; Commissioner (Appeals) had excluded turnover from Central Warehousing Company but retained part of the computation as "milk supply" without further proof.

- Application of law to facts: In absence of departmental finding or evidence that the activity constituted provision of a service, the Tribunal held that supply of milk should be characterized as trading activity and not taxable as service.

- Treatment of competing arguments: The Department's reliance on the label in computation was insufficient; the Tribunal rejected the presumption that a computation entry for "milk supply" necessarily establishes a service for service tax purposes.

- Conclusion: Supply of milk, as reflected in the computation, was not established to be a taxable service and was properly characterized as trading activity for the purposes of service tax law; demand on that basis cannot be sustained.

Issue (4): Invocability of extended period under proviso to Section 73(1) - suppression and limitation

- Relevant legal framework and precedents: Proviso to Section 73(1) permits demand beyond limitation period where there is suppression of facts with intent to evade service tax. Public documents (e.g., ITR/Form 26AS) are not private concealments by the assessee; suppression requires a deliberate withholding of material facts.

- Court's interpretation and reasoning: The Tribunal found no suppression by the assessee because the Department's case was built on figures taken from ITR/Form 26AS, which are public documents. The Tribunal held that where the information is already in public domain and accessible to the Department, the allegation of suppression by the assessee cannot be sustained.

- Key evidence and findings: The source of the Department's information was a third'party data exchange from the Income Tax Department; there was no evidence of deliberate concealment by the assessee of transaction particulars from the tax authorities.

- Application of law to facts: Because the Department relied upon publicly filed ITR/26AS and there was no proof of intentional suppression by the assessee, the conditions for invoking the extended period were not met; accordingly the demand was time'barred.

- Treatment of competing arguments: The Department's attempt to invoke the proviso to Section 73(1) on the basis of the ITR figures was rejected; the Tribunal held that absence of suppression precludes extended limitation.

- Conclusion: Proviso to Section 73(1) could not be invoked; the demand was barred by limitation.

Issue (5): Correctness of applying the higher service tax rate for the entire period without period'wise breakup

- Relevant legal framework and precedents: Tax computation must reflect applicable rates for specific periods; where different rates apply in different sub'periods, proper period'wise allocation is required to compute liability accurately.

- Court's interpretation and reasoning: The Tribunal noted the Department applied the higher rate (15%) uniformly because the assessee did not furnish period'wise breakup. However, the Tribunal treated this as another consequence of the Department's failure to establish the taxability of the receipts; since the underlying demand was unsustainable, mathematical issues of rate application were immaterial to sustaining the demand.

- Key evidence and findings: Lack of period'wise breakup in the assessee's submissions and the Department's presumption of higher rate across the year; no independent evidence to justify this assumption.

- Application of law to facts: Even if the higher rate was misapplied, the primary defect was the absence of a legally sustainable demand; hence incorrect rate application did not salvage the demand.

- Treatment of competing arguments: The Tribunal accepted the assessee's contention that presuming the higher rate for the entire amount was arbitrary and vague; but disposition turned on absence of taxability and limitation rather than solely on the rate issue.

- Conclusion: The rate'application criticism reinforced the procedural and evidentiary infirmities in the demand, but the Tribunal's disposal rested primarily on lack of taxability and limitation.

Issue (6): Sustainability of interest (Section 75) and penalties (Section 77(1)(C) and Section 78) where tax demand is unsustainable

- Relevant legal framework and precedents: Interest and penalties are consequential on a valid tax demand; where the principal tax demand fails, associated interest and penalties typically do not survive.

- Court's interpretation and reasoning: The Tribunal held that once the tax demand itself is not sustainable and is time'barred, demands for interest under Section 75 and imposition of penalties under Section 77(1)(C) and Section 78 cannot survive. Additionally, imposition of penalty under Section 78 requires findings of fraud, collusion, willful misstatement or suppression; such findings were absent.

- Key evidence and findings: No proof of suppression or willful misstatement; source of Departmental information was public; adjudicating authorities did not establish culpable conduct warranting penalty under Section 78 or Section 77(1)(C) beyond confirming amounts derived from ITR computations.

- Application of law to facts: As the principal demand was set aside for being unsustainable and time'barred, the consequential interest and penalties were also set aside.

- Treatment of competing arguments: The Department's imposition of penalties based on the computational demand was rejected because the foundational legal and factual bases for such penalties were not demonstrated.

- Conclusion: Interest and penalties linked to the impugned tax demand were not sustainable and were set aside.

Overall Disposition and Cross'References

- The Tribunal set aside the impugned order'in'appeal and allowed the appeal with consequential relief, holding that (i) demands based solely on ITR/Form 26AS computations without specific departmental findings on taxability are unsustainable; (ii) SCNs must specify the service in dispute; (iii) supply of milk was not established as a taxable service but is trading; (iv) extended limitation could not be invoked where information originated from public documents; and (v) consequential interest and penalties do not survive where the tax demand collapses. (Cross'reference: Issues 1, 2, 3 feed into Issues 4 and 6.)

1. ISSUES:

1.1 Whether services rendered by a vocational training provider qualify as services of a "vocational training institute" eligible for exemption under Notification No. 24/2004-S.T. (as in force prior to 01.07.2012) and related notifications.

1.2 Whether Modular Employable Skill ("MES") courses run by a person registered with the Directorate General of Employment and Training (DGET) qualify for exemption under Notification No. 23/2010-S.T. (effective till 01.07.2012) and the definition of "approved vocational education course".

1.3 Whether, after 01.07.2012, services falling within "education as a part of an approved vocational education course" under Section 66D(l)(iii) and the definition of "approved vocational education course" in Section 65B are exempt from service tax.

1.4 Whether registration at a centralised premises satisfies Rule 4(2) of the Service Tax Rules for purposes of claiming exemptions and credits for operations conducted at other offices/addresses.

1.5 Whether services provided by a training partner approved by the National Skill Development Corporation (NSDC) or Sector Skill Council fall within Sl. No. 9A of Mega Exemption Notification No. 25/2012-S.T. (w.e.f. 10.09.2013) and are exempt.

1.6 Whether denial of CENVAT Credit is sustainable where Chartered Accountant certificates, with annexed invoice-wise details, certify the availment and applicability of credit to output services.

1.7 Whether amounts characterized and taxed as "salary" (with TDS under Section 192 of the Income Tax Act) are liable to service tax under the reverse charge mechanism as remuneration to directors.

1.8 Whether receipts from the "sale of books and periodicals" constitute taxable services or are outside service tax scope as "sale of goods".

1.9 Whether invocation of the extended period of limitation under Section 73(1) is permissible absent invocation of the proviso (i.e., where no suppression of facts with intent to evade is alleged).

1.10 Whether penalties are imposable where demands are raised solely on differences between returns and books without a finding of suppression of material facts.

2. RULINGS / HOLDINGS:

2.1 The services in question qualify as services of a "vocational training institute" within the meaning of Notification No. 24/2004-S.T.; exemption under that Notification (as effective till 01.07.2012) is available. The Court held that such services "impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching."

2.2 MES courses run by a person registered with DGET qualify for exemption under Notification No. 23/2010-S.T.; the certificate in the name of an office of the provider was accepted as covering the provider's operations and the exemption was allowed.

2.3 For the period after 01.07.2012, services that fall within "education as a part of an approved vocational education course" under Section 66D(l)(iii) are exempt; the definition of "approved vocational education course" in Section 65B (as amended) was applied to hold the services exempt.

2.4 Centralised registration and maintenance of a "centralized accounting system" satisfies Rule 4(2); there is no requirement to register each office separately where centralized registration covers all operations.

2.5 Services provided by a training partner approved by NSDC or a Sector Skill Council are exempt under Sl. No. 9A of Mega Exemption Notification No. 25/2012-S.T. (w.e.f. 10.09.2013) where documentary evidence establishes such approval.

2.6 Denial of CENVAT Credit was unsustainable where year-wise Chartered Accountant certificates, with invoice-wise annexures verifying the credits and their use in relation to output services, were produced; such CA certificates were accepted as sufficient proof.

2.7 Amounts shown and taxed as "salary" with TDS under Section 192 of the Income Tax Act are not liable to service tax under the reverse charge mechanism; the demand on directors' remuneration was set aside.

2.8 Receipts from "sale of books and periodicals" are sale of goods and not taxable as service; the service tax demand on such sales was set aside.

2.9 Invocation of the extended period under Section 73(1) requires the proviso (suppression of facts with intent to evade) to be invoked; where the proviso was not invoked and no suppression found, extended period invocation and resultant demands are unsustainable.

2.10 Penalties imposed where demands are based solely on differences between ST-3 returns and books of account, without a finding of suppression of material facts, are not imposable and were set aside.

3. RATIONALE:

3.1 The court applied the textual definitions and exemptions in Notification No. 24/2004-S.T., Notification No. 03/2010-S.T. (amending the vocational training definition), Notification No. 23/2010-S.T. (MES exemption), Section 66D(l)(iii) (Negative List), and the definition of "approved vocational education course" in Section 65B (including its 2013 amendment), reading documentary evidence against those statutory texts to determine eligibility for exemptions.

3.2 Centralised registration and centralized accounting were treated in light of Rule 4(2) of the Service Tax Rules; the CA certificate and affidavit evidencing integrated operations were relied upon to treat separate premises as part of the same registered entity for exemption and credit purposes.

3.3 Sl. No. 9A of Mega Exemption Notification No. 25/2012-S.T. (w.e.f. 10.09.2013) was interpreted to exempt services by an NSDC-approved "training partner" in relation to NSDC-implemented skill development schemes where approval/registration documents were produced.

3.4 CENVAT Credit denial was examined under the CENVAT credit regime; the court treated Chartered Accountant certificates accompanied by invoice-wise annexures as adequate verification of credit admissibility and use for output services, and therefore insufficient ground existed for denial.

3.5 On reverse charge and characterization of remuneration, the court relied on the income tax treatment and TDS under Section 192 to conclude that amounts treated and taxed as "salary" are not service receipts subject to service tax under the reverse charge mechanism.

3.6 On sale of goods versus taxable service, the court applied the service tax principle that pure "sale of goods" is not a taxable service and set aside demands where transactions were sales of books/periodicals without a service component.

3.7 Concerning limitation and penalties, the court applied Section 73(1) and its proviso, holding that absent invocation of the proviso or any finding of "suppression of facts" with intent to evade, the extended limitation period cannot be validly invoked and consequential penalties for suppression cannot be sustained.

3.8 There are no separate concurring or dissenting opinions recorded.

1. ISSUES:

1.1 Whether services rendered by a person who is not "a port or other port or any person authorized by such port or other port" prior to 01.07.2010 fall within the definition of "Port Service".

1.2 Whether the services in question are classifiable as "Cargo Handling Service" and whether "handling of export cargo" is excluded from service tax liability under Section 65(23) of the Finance Act, 1994.

1.3 Whether reversal of inadmissible CENVAT Credit that has been voluntarily reversed by the assessee attracts penalty where suppression of facts with intent to evade tax is not established.

1.4 Whether demand issued after the normal limitation period can be sustained by invoking the "extended period of limitation" in the absence of suppression with intent to evade payment of service tax.

1.5 Whether interest is payable on irregularly availed CENVAT Credit from date of availment to date of reversal where credit has been subsequently reversed.

2. RULINGS / HOLDINGS:

2.1 On Issue 1.1 - The demand of service tax confirmed under the category of "Port Service" for the period prior to 01.07.2010 is not sustainable because, prior to that date, "Port Service means any service rendered by a port or other port or any person authorized by such port or other port, in any manner, in relation to a vessel or goods".

2.2 On Issue 1.2 - The services in question are appropriately classifiable under "Cargo Handling Service" as defined under Section 65(23), and "handling of export cargo has been specifically excluded from the purview of service tax as defined under Section 65(23)"; accordingly the demand under "Port Service" is set aside.

2.3 On Issue 1.3 - No penalty is imposable for the irregular CENVAT Credit of Rs.1,81,251/- because suppression of facts with intention to avail irregular credit has not been established and the assessee accepted and reversed the inadmissible credit.

2.4 On Issue 1.4 - Demands confirmed by invoking the extended period of limitation are not sustainable where the Show Cause Notice was issued after the normal period but no suppression with intent to evade tax is established and documents had been produced during the earlier audit; the demand is set aside on the ground of limitation.

2.5 On Issue 1.5 - The assessee is liable to pay interest on the inadmissible CENVAT Credit "from the date of availment till the date of reversal", if not already paid; however, no penalty is imposed for the inadvertent availment.

3. RATIONALE:

3.1 The court applied the statutory definitions and temporal scope of taxable services, noting that the pre-01.07.2010 definition of "Port Service" was restrictive and limited liability to services rendered by a port or persons authorized by the port; the post-01.07.2010 amendment expanded that scope.

3.2 The court treated classification under Section 65(23) ("Cargo Handling Service") as determinative for the facts, observing that statutory exclusion for "handling of export cargo" removes the services from service tax liability for the relevant period.

3.3 The court relied on binding higher-court precedent interpreting the temporal effect of the expanded definition of "Port Service" and followed the principle that an amendment expanding taxable scope cannot be applied retrospectively to periods before the amendment.

3.4 Concerning limitation and penalties, the court applied the established principle that invocation of the extended period requires a finding of "suppression of facts with intention to evade payment of service tax"; absent such suppression and where records were produced during audit, extended limitation and penalty are not sustainable.

3.5 On CENVAT mechanics, the court recognized the obligation to reverse inadmissible input credit and to pay interest for the period the credit was held, but reaffirmed that penalty requires culpability and is not warranted where reversal was voluntary and no intent to evade is shown.

1. ISSUES:

1.1 Whether cenvat credit availed by the recipient on goods classified in the supplier's invoices under the phrase "central excise tariff heading 8705" is allowable as "capital goods" within the meaning of Rule 2(a)(A)(i) of the Cenvat Credit Rules, 2004.

1.2 Whether the classification indicated by the supplier/manufacturer in its invoice may be re-determined at the recipient's end for purposes of cenvat credit entitlement.

1.3 Whether invocation of the extended period of limitation under the "proviso to Section 73(1)" is sustainable in the absence of evidence of a "positive act of wilful misstatement or suppression of facts with intent to evade payment of duty".

2. RULINGS / HOLDINGS:

2.1 On classification and entitlement: When goods falling under "central excise tariff heading 8705" were not covered under the definition of "capital goods" in Rule 2(a)(A)(i) of the Cenvat Credit Rules, 2004 during the relevant period, cenvat credit taken on the basis of supplier invoices classifying the goods under tariff heading 8705 was not allowable; invoices indicating the tariff heading and duty discharged at the manufacturer's end "cannot be discarded at the customer's end" for determining entitlement to cenvat credit.

2.2 On re-determination of supplier classification: The classification of goods by the supplier/manufacturer in its invoice is final for the recipient and the recipient cannot re-determine the classification at its end to avail cenvat credit under a different heading; the recipient would have needed to have the supplier rectify/endorse the invoices if it contested classification.

2.3 On limitation and extended period: Invocation of the extended period under the "proviso to Section 73(1)" was unsustainable where the record did not disclose any "positive act of wilful misstatement or suppression of facts with intent to evade payment of duty"; consequently the demand, interest and penalty founded on the extended period are barred by limitation.

3. RATIONALE:

3.1 Statutory framework applied: The Court applied the definition of "capital goods" in Rule 2(a)(A)(i) of the Cenvat Credit Rules, 2004, Rule 3(1) permitting cenvat credit on specified duties paid on capital goods, and Rule 9(1) which makes an invoice issued by a manufacturer a foundational document for taking cenvat credit; where the invoice specifies a tariff heading and duty paid, that classification is material to entitlement.

3.2 Precedential principle applied: The Court followed the authoritative principle that classification effected at the supplier/manufacturer end in an invoice is determinative and "shall be treated and/or considered" as such at the recipient's end, and therefore a recipient cannot unilaterally change classification to claim credit; the opinion also noted that, if contested, the appropriate course is to have the supplier rectify or endorse the invoice.

3.3 Limitation doctrine applied: The Court held that the proviso to Section 73(1) requires the Revenue to demonstrate ingredients justifying extended limitation, specifically evidence of a deliberate or positive act of concealment; absence of any allegation or evidence of a "positive act of wilful misstatement or suppression of facts with intent to evade payment of duty" precludes invocation of the extended period and renders demands time-barred, with consequential denial of interest and penalty.

3.4 Outcome and consequential relief: On the merits the recipient was not entitled to credit where supplier invoices classified the goods under tariff heading 8705 (not "capital goods"); however, because the extended period was improperly invoked without requisite positive acts of concealment, the demand, interest and penalty were set aside as barred by limitation and the recipient was granted consequential relief in law.

ISSUES:

Whether the construction work of a Technician Studio provided to a government department qualifies for exemption from Service Tax under Notification No. 25/2012-ST dated 20/06/2012, specifically under Sl. Nos. 12(a) and 12(c)(iii).Whether the construction work of the Science City Exploration Hall qualifies for exemption from Service Tax under Notification No. 25/2012-ST dated 20/06/2012, specifically under Sl. Nos. 12(a) and 12(c)(i).Whether the invocation of the extended period of limitation for demanding Service Tax is justified where the demand is based on discrepancies between 26AS statements, financial statements, and returns filed by the assessee.Whether interest and penalty can be imposed where the demand of Service Tax is not sustainable or where no suppression of information is found.

RULINGS / HOLDINGS:

On the Technician Studio construction, the Court held that the work is exempted from Service Tax as per Sl. Nos. 12(a) and 12(c)(iii) of Notification No. 25/2012-ST dated 20/06/2012, since the structure is predominantly used for purposes other than commerce and promotes art and culture, and occasional commercial use does not disentitle the exemption.On the Science City Exploration Hall construction, the Court upheld the exemption under Sl. Nos. 12(a) and 12(c)(i) of Notification No. 25/2012-ST dated 20/06/2012, recognizing the institution as an educational and non-profit governmental authority despite charging entry fees, rejecting the Revenue's contention that such charges imply commercial use.The Court held that the extended period of limitation cannot be invoked as the demand arose from discrepancies in information voluntarily furnished by the assessee, with no suppression of facts.Interest and penalty confirmed in the impugned order were set aside on the grounds that the Service Tax demand itself was not sustainable and no suppression of information was established.

RATIONALE:

The Court applied the exemption provisions under Notification No. 25/2012-ST dated 20/06/2012, specifically Sl. Nos. 12(a) and 12(c), which exempt services provided to governmental authorities by way of construction of civil structures meant predominantly for non-commercial use or for promotion of art and culture.The interpretation emphasized that "predominantly for use other than for commerce" does not require exclusive non-commercial use; occasional commercial use does not negate exemption.The Court relied on the definition of "governmental authority" under Section 65(26A) of the Finance Act, 1994, and considered the institutional control and objectives of the entities involved to determine the applicability of exemption.Regarding limitation, the Court referenced precedents holding that extended limitation cannot be invoked without suppression of facts, especially when the demand arises from discrepancies in voluntarily filed returns and statements.The Court distinguished commercial motive from mere collection of fees or charges by governmental or educational institutions, referencing Circular No. 80/10/2004-ST and relevant case law to support exemption despite such collections.

ISSUES:

Whether fish procured from fishermen and exported without rearing or breeding qualifies as "agricultural produce" exempt from service tax under relevant notifications.Whether transportation of such fish by Goods Transport Agency (GTA) service is exempt from service tax under Notification No. 25/2012 and related amendments.Whether sales commission paid to overseas commission agents qualifies for exemption from service tax under Notification No. 18/2009 and related notifications, and the applicability of Reverse Charge Mechanism.Whether the appellant's claim that processing of fish to make it marketable does not alter its essential characteristics and thus qualifies for exemption under Section 66D(iii) of the Finance Act.Whether failure to comply with procedural conditions for exemption or refund under relevant notifications constitutes mere procedural lapse or substantive violation attracting extended period and penalty under the Act.Whether the definition and place of provision of "intermediary services" under the Place of Provision of Services Rules, 2012 affects liability to pay service tax on overseas commission agents' services prior to and after 1st October 2014.

RULINGS / HOLDINGS:

Fish procured from fishermen from the sea, without any rearing or breeding by the appellant, does not qualify as "agricultural produce" within the meaning of the relevant notifications; thus, exemption under Sr. No. 21(a) of Notification No. 25/2012 is not applicable.Transportation of such fish by GTA service is not exempt from service tax as it is not agricultural produce, and service tax liability arises subject to the provisions of relevant notifications.Sales commission paid to overseas commission agents attracts service tax under Reverse Charge Mechanism; exemption under Notification No. 18/2009 is conditional and requires compliance with prescribed conditions, which were not fulfilled.Processing of fish by the appellant to make it marketable does not amount to "agriculture" or "agricultural produce" as the appellant is not engaged in pisciculture; hence, exemption under Section 66D(iii) does not apply.Failure to comply with procedural conditions for exemption or refund under Notifications No. 18/2009, 31/2012, and 42/2012 is not a mere procedural lapse but a substantive violation justifying invocation of extended period and imposition of penalty under Sections 78 and 70 of the Act read with Rule 7C of the Rules.Prior to 1st October 2014, commission agent services dealing in goods were governed by Rule 3 of the Place of Provision of Services Rules, 2012, and not Rule 9; thus, the appellant was liable to pay service tax on commission paid to overseas agents for the years 2012-13 and 2013-14.

RATIONALE:

The Court applied the definitions of "agriculture" and "agricultural produce" as per Notification No. 25/2012 and its amendments, interpreting that fish caught from the sea without rearing or breeding does not fall within these terms.The Court relied on the statutory framework under the Finance Act and the relevant Notifications (No. 18/2009, 25/2012, 31/2012, 42/2012), which provide conditional exemptions subject to compliance with procedural requirements such as production of consignment notes and filing of returns.The interpretation of "intermediary" under the Place of Provision of Services Rules, 2012 was examined, noting the amendment effective 1st October 2014 which expanded the definition to include supply of goods; prior to this, commission agent services were taxable under a different rule.The Court distinguished between procedural lapses and substantive non-compliance, holding that failure to follow prescribed conditions for exemption or refund constitutes substantive violation warranting extended period and penalty under the Act.The Court rejected the appellant's reliance on precedents that allowed benefit despite procedural lapses, emphasizing that the present case involves non-payment of service tax and failure to comply with mandatory conditions, not mere procedural irregularity.The Court upheld the Commissioner's factual findings regarding the appellant's non-filing of ST-3 returns and suppression of material facts, supporting the invocation of extended period and penalty provisions under Sections 78 and 70 of the Finance Act read with Rule 7C of the Rules.

ISSUES:

Whether the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 is invokable in the absence of fraud, collusion, wilful mis-statement, or suppression of facts.Whether a bona fide belief in exemption from service tax under Notification No.25/2012-ST can preclude the applicability of extended limitation period.Whether service tax demand can be confirmed when the service recipient is a Government entity and the appellant did not collect or reimburse service tax.Whether recovery of service tax collected from a service recipient can be made without invoking Section 73A of the Finance Act, 1994.Whether penalties under Sections 77 and 78 of the Finance Act, 1994 are sustainable in the facts of the case.

RULINGS / HOLDINGS:

The invocation of the extended period under the proviso to Section 73(1) of the Finance Act, 1994 is unsustainable where there is a "bona fide belief" and "genuine doubt" regarding taxability, and no evidence of fraud, collusion, wilful mis-statement, or suppression of facts exists.The appellant's reliance on the exemption under Notification No.25/2012-ST, supported by the contractual clause and advice from Chartered Accountant, establishes a bona fide belief that precludes extended limitation.Recovery of service tax from the appellant is not sustainable when the service recipient is a Government entity, and there is no provision authorizing Revenue to collect service tax from other Government Agencies.Since the SCN does not invoke Section 73A of the Finance Act, 1994, recovery of service tax purportedly collected from the service recipient cannot be sustained under the present proceedings.The penalties imposed under Sections 77(1)(b), 77(1)(c), and 78 of the Finance Act, 1994 are not upheld due to the absence of suppression or evasion of tax and the unsustainable demand itself.

RATIONALE:

The Court applied the legal framework under the Finance Act, 1994, particularly Sections 73, 73A, 75, 77, and 78, and relied on binding precedents including the Hon'ble Supreme Court's judgment in Padmini Products vs. CCE, which held that the extended period of limitation applies only in cases involving "fraud, collusion or wilful mis-statement or suppression of facts."The Court emphasized that a "genuine doubt" regarding taxability arising from contractual terms and official representations can constitute a bona fide belief, negating intent to evade tax and thus excluding extended limitation.The absence of invocation of Section 73A, which governs recovery of service tax collected from service recipients, was a critical factor in rejecting the demand based on alleged collection of service tax.The Court noted the principle that Revenue cannot arbitrarily collect service tax from one Government entity on account of services provided to another Government entity without statutory authority.No dissenting or concurring opinions were recorded; the decision follows established doctrine with reaffirmation of the limits on extended limitation and recovery powers under the Finance Act.

ISSUES:

Whether service tax is leviable on activities of excavation and removal of overburden and barytes ore amounting to production of ore under the negative list provisions.Whether irregular availment of Cenvat credit is established when input service provider did not pay service tax but invoices were issued and credit was taken and utilized by the appellant.Whether extended period of limitation can be invoked for recovery of service tax and denial of credit in absence of evidence of fraud or willful misstatement.Whether penalty under relevant provisions is sustainable when demand is not upheld on merit and limitation grounds.

RULINGS / HOLDINGS:

Service tax is not leviable on the mining activity of excavation and removal of barytes ore as it amounts to "production of ore" and falls under the negative list under section 66D(f) of the Finance Act, 1994; therefore, the demand for service tax on such activity is unsustainable.Irregular availment of Cenvat credit cannot be sustained merely because the input service provider did not pay service tax; the appellant took credit on bona fide invoices and utilized the same for payment of service tax on output services, making the transaction revenue neutral and lawful.Extended period of limitation is not invokable absent any positive and cogent evidence of fraud, willful misstatement, or suppression with intent to evade tax; mere non-payment of service tax by the supplier does not justify extended period invocation.Penalty under section 78 is not sustainable when the demand itself is not sustainable on merit and limitation grounds.

RATIONALE:

The Court applied the negative list provisions under section 66D(f) of the Finance Act, 1994, which excludes from service tax any service by way of carrying out any process amounting to manufacture or production of goods, relying on authoritative precedents including the Supreme Court decision in CIT Vs Sesa Goa Ltd and coordinate bench rulings.The Court distinguished prior rulings where mining was treated as service rather than manufacture/production, emphasizing the specific facts and nature of the contract leading to the conclusion that mining barytes ore constitutes production of goods.Regarding Cenvat credit, the Court considered statutory provisions including Rule 4(7) of Cenvat Credit Rules, 2004 (effective from 01.03.2015) and earlier case law (Prachi Poly Products Ltd, Spic Pharmaceuticals Division, Bhuwalka Steel Industries Ltd) holding that credit cannot be denied to the recipient due to supplier's default in payment of duty, especially in absence of collusion or fraud.The Court found no credible evidence that invoices were fabricated; doubts raised by investigating agencies were due to lack of corroborative records rather than proof of forgery, and the appellant's books of account and ST-3 returns consistently reflected the transactions.The Court held that the appellant's payment of service tax on output services exceeded the input credit taken, resulting in a revenue neutral position, and thus no recovery or reversal of credit was warranted.Extended period of limitation under section 73 was rejected due to absence of evidence of fraudulent intent or suppression, consistent with Supreme Court authority restricting extended period invocation to cases involving such elements.Penalty under section 78 was set aside as it is consequential on the demand which failed on merit and limitation grounds.

1. ISSUES PRESENTED and CONSIDERED

• Whether the extended period of limitation under the Finance Act, 1994 can be invoked for demanding service tax for the period April 2005 to December 2009.
• Whether penalties under Sections 76, 77, and 78 of the Finance Act, 1994 are justified in the absence of suppression or fraud.
• Whether the appellant's activities fall within the ambit of 'Erection, Commissioning or Installation Service' and 'Works Contract Service' and the applicability of limitation periods thereto.
• Whether the appellant is entitled to abatement of 67% on the gross value of contract including goods supplied.
• The effect of short payment of service tax and subsequent payment after issuance of Show Cause Notice on the liability for penalty and interest.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Invocation of Extended Period of Limitation for Service Tax Demand

Relevant Legal Framework and Precedents: The extended period of limitation under the Finance Act, 1994, specifically the proviso to Section 73(1), allows demand of service tax beyond the normal limitation period if there is suppression of facts with intent to evade tax.

Court's Interpretation and Reasoning: The Court examined whether the appellant's short payment of service tax amounted to suppression with intent to evade tax. It was noted that the appellant had discharged the entire service tax along with interest before adjudication, indicating no concealment or fraudulent intent.

Key Evidence and Findings: The audit revealed short payment of service tax, but the appellant's statutory records were transparent and available. The appellant did not dispute the demand but challenged the extended limitation period and penalties.

Application of Law to Facts: Since suppression with intent to evade tax was not established, invocation of the extended limitation period was not justified. The Court held that mere short payment without fraudulent intent does not satisfy the conditions for extended limitation.

Treatment of Competing Arguments: Revenue argued for extended limitation based on audit findings; appellant contended no suppression or fraud. The Court sided with the appellant on this point.

Conclusion: The extended period of limitation could not be invoked as the essential condition of suppression with intent to evade payment was not proven.

Issue 2: Justification for Penalties under Sections 76, 77, and 78

Relevant Legal Framework and Precedents: Section 78 imposes penalty where service tax is short paid or not levied due to fraud, collusion, wilful mis-statement, or suppression of facts with intent to evade tax. Sections 76 and 77 relate to penalties for failure to pay service tax and for interest on delayed payment.

Court's Interpretation and Reasoning: The Court emphasized that penalty under Section 78 is contingent upon proof of suppression or fraud. Since this was not established, penalty under Section 78 was not sustainable.

Key Evidence and Findings: The appellant paid the tax and interest before adjudication and maintained proper records. There was no evidence of fraudulent conduct or deliberate suppression.

Application of Law to Facts: The Court held that invoking penalties under Section 78 without establishing suppression or fraud is contrary to statutory requirements. Penalties under Sections 76 and 77, however, were not challenged and remain valid.

Treatment of Competing Arguments: Revenue maintained penalties were justified due to short payment and delayed payment; appellant argued absence of intent to evade tax. The Court agreed with the appellant regarding Section 78 penalty.

Conclusion: Penalty under Section 78 was deleted; penalties under Sections 76 and 77 were upheld as not contested.

Issue 3: Classification of Services and Applicability of Limitation Periods

Relevant Legal Framework and Precedents: Service tax on 'Erection, Commissioning or Installation Service' was introduced on 16.06.2005; 'Works Contract Service' was introduced from 01.06.2007. Tax demands prior to these dates are not tenable.

Court's Interpretation and Reasoning: The Court accepted that demands relating to installation/erection services prior to 16.06.2005 and works contract services prior to 01.06.2007 are invalid and liable to be set aside.

Key Evidence and Findings: The appellant provided services involving supply and installation of electrical goods to BSNL. The impugned order did not consider the limitation periods applicable to these services correctly.

Application of Law to Facts: The Court modified the demand to exclude periods prior to the introduction of service tax on respective services.

Treatment of Competing Arguments: The appellant argued for exclusion of pre-introduction periods; Revenue did not dispute the legal position.

Conclusion: Demands relating to periods before 16.06.2005 for installation services and before 01.06.2007 for works contract services were set aside.

Issue 4: Entitlement to 67% Abatement on Gross Value of Contract

Relevant Legal Framework and Precedents: Abatement of 67% is allowed on the gross value of works contract including goods supplied, recognizing that the contract involves both supply and service.

Court's Interpretation and Reasoning: The impugned order rejected the abatement on the ground of lack of evidence. The appellant submitted sample work orders, supply orders, invoices, and payment orders to demonstrate the composite nature of contracts.

Key Evidence and Findings: Documentary evidence showed comprehensive contracts involving supply and service to BSNL.

Application of Law to Facts: The Court found that the abatement of 67% could not be denied merely due to alleged absence of evidence, given the documents produced.

Treatment of Competing Arguments: The appellant relied on documentary proof; Revenue contested adequacy of evidence.

Conclusion: The appellant was entitled to the 67% abatement on the gross value of contracts including goods supplied.

Issue 5: Effect of Short Payment and Subsequent Full Payment of Service Tax

Relevant Legal Framework and Precedents: Short payment of service tax attracts interest and penalties unless justified. Payment of tax and interest before adjudication may mitigate penalty liability.

Court's Interpretation and Reasoning: The appellant admitted short payment but discharged full tax and interest after issuance of Show Cause Notice and before adjudication. There was no concealment or suppression.

Key Evidence and Findings: The appellant's statutory records were transparent; payment was made voluntarily without dispute over the quantum.

Application of Law to Facts: The Court held that since the appellant did not dispute the tax liability and paid the dues promptly, penalties for suppression or fraud were not warranted.

Treatment of Competing Arguments: Revenue argued for penalties due to short payment; appellant highlighted absence of intent to evade.

Conclusion: Interest and tax demands were justified; penalties dependent on suppression or fraud were not sustainable.

1. ISSUES PRESENTED and CONSIDERED

• Whether the services rendered by distributors of a company, involving promotion, marketing, or sale of goods, attract service tax under the category of "Business Auxiliary Service."
• Whether the sale of goods by distributors, after purchasing from the principal company, constitutes a taxable service to the principal under Business Auxiliary Service.
• Whether commission or incentives received by distributors from the principal company, linked to their own purchases, are taxable as consideration for Business Auxiliary Service.
• Whether commission received by distributors for sponsoring and enrolling other distributors (second-level distributors) constitutes taxable Business Auxiliary Service.
• Whether individuals providing Business Auxiliary Services prior to 1-5-2006 can be treated as "business concerns" liable to service tax.
• Whether exemption notification No. 6/2005-S.T. (formerly No. 5/2006-ST) applies to distributors promoting sale/marketing of branded products of another person.
• Whether the demand for service tax on the gross commission without distinguishing between commission on own sales and commission on sales by sponsored distributors is justified.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 & 2: Taxability of services rendered by distributors under "Business Auxiliary Service"

- Relevant legal framework: Section 65(105)(zzb) (now Section 19(i)) defines Business Auxiliary Service as services related to promotion, marketing, or sale of goods produced or provided by or belonging to a client.

- Court's interpretation and reasoning: The Court held that the activity covered under Business Auxiliary Service pertains to promotion or marketing or sale of goods produced or provided by the client. However, when distributors purchase goods from the principal company at a Distributor Acquisition Price and sell them in retail, these goods cease to belong to the principal and belong to the distributor. Therefore, the sale of these goods by the distributor does not constitute a service to the principal.

- Key findings: The Court emphasized that the sale of goods by distributors, after purchase, is not a service rendered to the principal but a sale by the distributor of his own goods.

- Application of law to facts: Since the distributors purchase and then sell the goods, their retail sale does not amount to promotion or marketing of the principal's goods as a service, and thus no service tax is leviable on the profit from such sales.

- Treatment of competing arguments: The Department's contention that the distributors' sales fall within Business Auxiliary Service was rejected on the ground that the goods sold no longer belong to the principal.

- Conclusion: No service tax is chargeable on the profit earned by distributors from retail sales of goods purchased from the principal company.

Issue 3: Taxability of commission or incentives linked to distributor's own purchases

- Court's reasoning: The commission or incentive received by distributors linked solely to the volume of their own purchases (and not linked to sales) is akin to a volume discount and not consideration for promotion or marketing services.

- Conclusion: Such commission or incentives are not taxable under Business Auxiliary Service.

Issue 4: Taxability of commission received for sponsoring other distributors (second-level distributors)

- Court's interpretation: The activity of a distributor in identifying and sponsoring other persons who become second-level distributors is an activity of marketing or sale of goods belonging to the principal company.

- Reasoning: Commission received by a distributor based on the sales volume of his sponsored sales group constitutes consideration for Business Auxiliary Service rendered to the principal.

- Key finding: The service tax demand must be confined only to the commission linked to the performance of the distributor's sales group.

- Application of law: The Court noted that the impugned orders demanded service tax on the gross commission without distinguishing between commission on own purchases and commission on sales group purchases, which was incorrect.

- Conclusion: Service tax is chargeable only on the commission received for the sales promotion services related to the sales group's purchases, and the matter requires remand for proper quantification.

Issue 5: Taxability of Business Auxiliary Service provided by individuals prior to 1-5-2006

- Legal framework: Prior to 1-5-2006, service tax was chargeable only on services provided by a "commercial concern." Post 1-5-2006, the term was replaced by "any person."

- Court's reasoning: An individual engaged in commercial activity, including proprietary firms, qualifies as a commercial concern. There is no distinction between a proprietary firm and the individual owner for this purpose.

- Conclusion: Business Auxiliary Service rendered by individuals or proprietary firms prior to 1-5-2006 is taxable.

Issue 6: Applicability of exemption notification No. 6/2005-S.T. to distributors promoting branded products

- Department's contention: Exemption is not applicable where the taxable service is provided under the brand or trade name of another person.

- Court's interpretation: Marketing or sale promotion of branded products by a distributor does not amount to providing a branded taxable service. The brand name belongs to the principal company, not the distributor providing the service.

- Reasoning: The exclusion clause in the exemption notification applies to branded services, not to services promoting branded goods.

- Conclusion: The distributors are eligible for exemption under Notification No. 6/2005-S.T., subject to verification by the original authority.

Issue 7: Demand for service tax on gross commission without distinction

- Court's observation: The impugned orders failed to distinguish between commission earned on own purchases and commission earned on sales group purchases.

- Reasoning: Only commission linked to sales group performance constitutes taxable Business Auxiliary Service; commission linked to own purchases does not.

- Conclusion: The service tax demand must be recalculated accordingly, and the matter remanded for de novo consideration.

General procedural direction

- The Court directed remand of the matter to the original adjudicating authority for de novo consideration of all issues, including eligibility for exemption and correct quantification of service tax liability.

- The adjudicating authority is to complete proceedings within 16 weeks and provide the appellants an opportunity to present their case with supporting documents.

ISSUES:

Whether the demand for Service Tax on Construction and Maintenance and Repair Services is barred by limitation.Whether the Revenue properly quantified the Service Tax demand by bifurcating turnover under Construction Service under CICS and Maintenance and Repair Services.Whether the invocation of extended period for issuing Show Cause Notice was justified.Whether the Revenue complied with the requirement to scrutinize self-assessed Service Tax Returns and raise queries within the limitation period.

RULINGS / HOLDINGS:

The demand is effectively limited to the period up to 2006-07, and inclusion of 2008-09 turnover to justify delayed issuance of Show Cause Notice is improper; therefore, the demand is barred by limitation.The Revenue erred by not providing a proper bifurcation of the demand under Construction Service and Maintenance and Repair Services, which deprived the appellant of the opportunity to claim abatement on materials used; quantifying demand based solely on generalized turnover is incorrect.The invocation of the extended period was unjustified as the Revenue failed to scrutinize the self-assessed returns and raise objections within the prescribed time, despite the appellant having filed ST-3 Returns.The confirmed demand is legally unsustainable both on merits and on account of time bar and is set aside accordingly.

RATIONALE:

The legal framework requires that prior to 01.07.2012, the Revenue must specify the classification under which Service Tax demand is made, and properly quantify the demand considering applicable abatements.Revenue officials are mandated to scrutinize self-assessed Service Tax Returns (ST-3) and raise queries within the limitation period as per CBEC Manual instructions; failure to do so precludes invocation of extended period provisions.Precedent affirms that once returns are filed, Revenue must undertake scrutiny and raise queries timely; delayed action without proper quantification and classification violates principles of natural justice and statutory requirements.

ISSUES:

Whether retreading of tyres constitutes a service under the category of "Maintenance and Repair Service" of motor vehicles and is excluded from Service Tax under section 65(64) of the Finance Act, 1994 w.e.f. 01.05.2006.Whether the retreading activity is in the nature of "Works Contract Service."Whether w.e.f. 20.08.2005, when a specific entry for retreaded tyres was introduced under the Central Excise Tariff Act, the retreading activity is liable as excisable goods or as a service.

RULINGS / HOLDINGS:

Retreading of tyres is excluded from levy of Service Tax under section 65(64) of the Finance Act, 1994, as it constitutes maintenance/repair of motor vehicles, given that tyres are "integral, essential and indispensable parts" of motor vehicles without which they cannot function.The activity of retreading tyres involves both material and service components and qualifies for merit classification as "Works Contract Service," where the service component is approximately 30% and the material component 70%, entitling the appellant to claim rebate on VAT paid on materials.Retreaded tyres are "excisable goods" under Chapter sub-heading 4012 of the Central Excise Tariff Act, 1985, and thus the retreading activity is liable to Central Excise duty and not Service Tax, notwithstanding that no rate of duty is prescribed under the tariff item.

RATIONALE:

The Court applied section 65(64) of the Finance Act, 1994, which excludes "management, maintenance or repair" of motor vehicles from Service Tax. The interpretation relied upon the decision in M/s. Kuttukaran Trading Ventures, affirming that maintenance or repair of any part of a motor vehicle, including tyres, qualifies for exclusion since the motor vehicle includes all its parts and is incomplete without them.The Court recognized the composite nature of the retreading activity, involving both goods and services, thus meriting classification under "Works Contract Service." This aligns with precedent decisions such as Padmashree Tyre Retreading Works and Safety Retreading Co. (P) Ltd., which acknowledge the dual character of such activities.The Court relied on the definition of "excisable goods" under section 2(d) of the Central Excise Act, 1944, and the inclusion of retreaded tyres under Chapter Heading 4012 of the Central Excise Tariff Act, 1985 effective from 20.08.2005. It noted that the absence of a specified excise duty rate does not negate excisability, consistent with the Tribunal's reasoning in Bokaro Power Supply Co. (P) Ltd. regarding electricity as excisable goods despite a blank rate column.The Court distinguished the earlier Supreme Court decision in P. Cheriyan v. Mst. Barti Devi (1979), which held retreading did not amount to manufacture, on the basis that the relevant tariff entry for retreaded tyres was introduced only in 2005, postdating that decision, thus rendering it inapplicable to the present facts.

1. Whether the show cause notices (SCNs) were valid and specific in alleging service tax liability under the correct service categories, including Commercial or Industrial Construction Service (CICS), Construction of Complex Service (CCS), and Works Contract Service (WCS).

2. Whether the value of free of cost materials supplied by the service recipient should be included in the taxable value of services.

3. Classification of composite contracts executed by the appellant prior to and after 1st June 2007 under the appropriate taxable service category for service tax purposes.

4. Whether the extended period of limitation for service tax demand is invokable in absence of willful suppression or intent to evade tax.

1. The SCNs were held to be vague and non-specific as they did not segregate the quantum of service tax liability under each service category (CICS, CCS, WCS), thus failing to provide the appellant proper opportunity to meet the allegations; such SCNs are liable to be rejected.

2. Following the Apex Court ruling in Bhayana Builders and CBIC circulars, the value of free of cost materials supplied by the service recipient cannot be included in the taxable value of services; hence, tax demand on such value is unsustainable.

3. The appellant's composite contracts prior to 1st June 2007 cannot be classified as taxable under Commercial or Industrial Construction Service; post 1st June 2007, such composite contracts are liable to be classified under Works Contract Service only, and demand under any other category cannot be sustained.

4. Extended period of limitation cannot be invoked absent willful suppression or intent to evade tax; mere failure to correctly declare or assess service tax does not amount to willful suppression.

The Court applied the statutory framework under the Finance Act, 1994, particularly definitions under Section 65(105) for taxable services and valuation provisions under Section 67. It relied on precedent from the Apex Court including the landmark Larsen & Toubro Ltd. judgment clarifying classification of composite contracts and the Bhayana Builders ruling on valuation of free materials.

The Court emphasized that the show cause notice is foundational and must specify allegations clearly to afford a fair opportunity, citing the Apex Court decision in Brindavan Beverages Pvt. Ltd.

Regarding valuation, the Court referred to CBIC circulars and prior CESTAT decisions that exclude free materials from taxable value, consistent with principles under Section 12(2)(b) of the CGST Act.

The Court noted the absence of any attempt by the department to segregate non-service elements from composite contracts, reinforcing the correct classification under WCS post 1.6.2007.

On limitation, the Court applied settled legal principles that extended period applies only where there is willful suppression or evasion, referencing authoritative Supreme Court decisions in Cosmic Dye Chemical and Anand Nishikawa Co. Ltd.

1. ISSUES PRESENTED and CONSIDERED

- Whether an appeal admitted and heard by the Commissioner (Appeals) can be dismissed in the final order on the ground of limitation without earlier issuance of a defect notice or providing the appellant an opportunity to explain delay.

- Whether the requirement under Sub-Section 4 of Section 35 A of the Central Excise Act (as made applicable to Service Tax matters by Sub'section 5 of Section 85 of the Finance Act, 1994) - to pass an order disposing of the appeal in writing stating points for determination, the decision thereon and the reasons for such decision - was complied with where the appeal was dismissed solely on limitation after hearing.

- Whether remand to the Commissioner (Appeals) is required for re'hearing where the appellant participated in hearing, the ground of delay was not agitated during hearing, and no defect notice on admissibility was issued prior to admission.

- Whether, in the circumstances of delay arising from an asserted technical glitch in meeting the pre'deposit/pre'condition to file appeal, the appellant ought to be permitted to file a condonation of delay (COD) application and be heard on that ground.

2. ISSUE'WISE DETAILED ANALYSIS

Issue A: Admissibility and procedure - dismissal on limitation after admission and hearing without defect notice or opportunity to explain

- Relevant legal framework and precedents:

- Sub-Section 4 of Section 35 A of the Central Excise Act (requirement to dispose of appeal in writing stating points for determination, decision and reasons). Sub'section 5 of Section 85 of the Finance Act, 1994 makes the above provision equally applicable to Service Tax matters. (Precedential decisions referenced in the judgment recognize that once an appeal is admitted and heard without notice of non'acceptance on ground of delay, dismissal as non'maintainable in the final order is impermissible.)

- Court's interpretation and reasoning:

- The Tribunal holds that the Commissioner (Appeals) should have examined admissibility before admitting and hearing the appeal, or at least issued a defect notice/notice of non'acceptance on the ground of delay prior to proceeding to adjudication on the merits. Dismissing the appeal for limitation after having admitted and heard it, without providing opportunity to explain the delay, contravenes the procedural safeguards embodied in Section 35 A(4) and principles of natural justice.

- Key evidence and findings:

- Order'in'Original dated 24.11.2023; admitted date of receipt by appellant accepted by the Commissioner (Appeals) as 10.01.2024; appeal filed on 13.03.2024 (three days beyond the two'month limitation); no defect notice issued prior to admission; appellant appeared and participated in hearing; para'4 of the Commissioner (Appeals) order records that "no other issue was raised" during hearing.

- Application of law to facts:

- Because the appeal was admitted and heard without prior objection on admissibility, and the appellant was not given an opportunity to place on record the grounds for delay (technical glitch in pre'deposit system), dismissal solely on limitation in the final order is procedurally inappropriate. The statutory requirement to set out points for determination, decision and reasons was not satisfied where dismissal followed hearing on merits'adjacent proceedings without antecedent consideration of admissibility.

- Treatment of competing arguments:

- The Respondent argued that, having regard to the date of the Adjudication Order (24.11.2023), the delay exceeded 90 days and therefore discretion to condone would not have been available. The Tribunal rejected reliance on the earlier date because the Commissioner (Appeals) himself accepted the date of receipt as 10.01.2024, which made the appeal three days late; further, the Commissioner (Appeals) did not afford opportunity to explain the delay nor issue defect notice prior to hearing.

- Conclusion:

- Dismissal of an appeal for limitation after it has been admitted and heard without issuance of a defect notice or opportunity to explain delay is improper. The appeal was not disposed of on the merits and procedural requirements were not complied with.

Issue B: Applicability and requirements of Section 35 A(4) as applied to Service Tax (via Section 85(5) Finance Act) and consequences of non'compliance

- Relevant legal framework and precedents:

- Sub'Section 4 of Section 35 A of the Central Excise Act mandates that the Commissioner (Appeals) pass an order disposing of the appeal in writing after stating the points for determination, decision thereon and the reasons for such decision. Sub'section 5 of Section 85 of the Finance Act, 1994 extends these provisions to Service Tax matters.

- Court's interpretation and reasoning:

- The Tribunal interprets the statutory requirement as obligating the Commissioner (Appeals) to consider admissibility, record points for determination and furnish reasons in the final order. Where an appeal is dismissed on limitation after hearing, without prior procedural steps, the statutory mandate to dispose by way of reasoned order is not satisfied.

- Key evidence and findings:

- Commissioner (Appeals) accepted the appellant's asserted date of receipt and the filing date but dismissed the appeal for limitation; the order indicates participation in hearing and that "no other issue was raised"; the statutory format of stating points for determination and reasons was not followed vis'à'vis the limitation issue which should have been addressed prior to admission.

- Application of law to facts:

- The statutory scheme requires that admissibility be addressed and reasons recorded. Failure to do so, especially when an appeal is effectively heard on merits without an antecedent determination of admissibility, warrants remedial action to ensure compliance.

- Treatment of competing arguments:

- The Respondent's contention that the delay was excessive from the earlier date of the order is countered by the Commissioner's own acceptance of the date of receipt and the procedural lapse in not issuing a defect notice or inviting explanation.

- Conclusion:

- Non'compliance with Section 35 A(4) (as applicable) in procedures pertaining to admission, defect notice and reasoned disposal requires that the matter be remanded for fresh consideration in accordance with statutory mandates.

Issue C: Remedy - remand for re'hearing, filing of condonation of delay application and subsequent disposal

- Relevant legal framework and precedents:

- Principles arising from Section 35 A(4) and the applied provisions for Service Tax; identified precedents support remand where appeal was admitted and heard without prior notice of non'acceptance for delay and where appellant was denied opportunity to explain delay.

- Court's interpretation and reasoning:

- The Tribunal finds it prudent to remit the appeal to the Commissioner (Appeals) for re'hearing because the appeal was not disposed on merits and procedural requirements were ignored. Remand is directed to enable the Commissioner (Appeals) to permit the appellant to file a COD application explaining the three'day delay and to re'decide the appeal after hearing on merit and after complying with the statutory requirement to state points for determination, decision and reasons.

- Key evidence and findings:

- Admission and participation in the hearing by the appellant; absence of pre'admission defect notice; appellant's explanation that delay arose due to a glitch in the payment system for making the pre'deposit, which was a pre'condition to file appeal; Commissioner (Appeals) accepted the date of receipt and the filing date.

- Application of law to facts:

- Given the factual acceptance of the relevant dates and the procedural lapse, the correct remedial course is remand to allow appellant to file COD application and for the Commissioner (Appeals) to re'hear and dispose the appeal in accordance with Section 35 A(4) (and applicable provisions), ensuring points for determination and reasons are recorded.

- Treatment of competing arguments:

- The Respondent's view that no interference was necessary because delay exceeded 90 days from an earlier date is rejected by the Tribunal on the grounds stated above; the Tribunal emphasizes adherence to procedure and opportunity to be heard over strict reliance on the earlier date when the Commissioner (Appeals) accepted a later receipt date.

- Conclusion:

- The appropriate remedy is remand. The Tribunal sets aside the impugned order only for the limited purpose of remand, directs notice to appellant, requires filing of the COD application well in advance together with a copy of the Tribunal order, and mandates disposal in accordance with Sub'Section 4 of Section 35 A (as applicable).

Cross'references:

- Issue A and Issue B are interrelated: the procedural infirmity (Issue A) constitutes non'compliance with the statutory disposal requirements under Section 35 A(4) (Issue B), which in turn justifies the remedial remand (Issue C).