By TIOL News Service

MUMBAI, OCT 28, 2013: THE brief facts are that the respondents are registered as provider of "On-line information and data base access or retrieval or both".

During the course of verification of records, it was observed that the registration fee collected by the respondent was not declared in the ST-3 returns filed by them.

Taking a view that the registration fee formed part of the value of the taxable service, a SCN for the period July 2001 to July 2003 was issued demanding service tax of Rs.32,00,857/- and imposition of interest and penalties.

The adjudicating authority confirmed the demand but the same was set aside by the Commissioner(A) on merits as well as on time barand hence Revenue is in appeal before the CESTAT.

The notice issued by the CESTAT Registry was received back with postal remark that the respondent had moved from the given address. So, none appeared on behalf of the respondent.

Before the Bench, the Revenue representative submitted that the registration fee collected by the respondent is part of the value of taxable service provided in respect of the activity of online information and data base access or retrieval on which the respondent is liable to pay service tax; that the amount of Rs.200/- received from their clients as registration fee was not refundable and is to be adjusted in the first purchase of the goods by the clients and if no purchase is made the registration fee is not to be refunded as such. In the matter of the demand being time barred as held by the lower appellate authority, it is submitted that the registration fee collected from the client was never declared to the department nor reflected in the ST-3 returns filed by the respondent and it was only during verification of records that the fact came to notice.

The Bench observed -

"8. We find that the respondents were paying service tax as provider of online information and data base access or retrieval or both. The respondents are not disputing the taxability of their service. The only issue is whether the registration fee charged from their clients are to be added to the value of taxable service which the respondents are liable to pay service tax. The registration fee is not refundable as such. The registration fee will be adjusted to the first purchase made by the clients in case no purchase is made the registration fee is not to be refunded. In view of this, the registration fee is not to be refunded as such, hence is required to be added to the gross value of taxable service on which the respondents are liable to pay service tax.

9. In respect of time bar issue, we find that the respondent has not disclosed this fact regarding collection of registration fee in the ST3 returns. It is only during the scrutiny of records it was found that the registration fee is not added to the gross value of the taxable service. Hence the allegation of suppression with intent to evade tax is also sustainable."

In fine, after setting aside the order passed by the Commissioner(A), the order-in-original was restored and the Revenue appeal was allowed.

In passing: Now, for the recovery of the adjudged dues from the assessee who has moved! Google him and pronto…there he is!

(See 2013-TIOL-1598-CESTAT-MUM)