By TIOL News Service

BANGALORE, NOV 09, 2018: WHILE dismissing the Revenue appeal, the CESTAT had observed thus -

"…The levy of service tax on C & F Agency service was initially imposed on the service provider in 1997. However, the said levy was transferred to users on reverse charge basis by a Notification. The Notification was quashed by the Hon'ble Supreme Court in the Lagu Udyog Bharathi vs. UOI holding that the levy of tax from the receiver was illegal. However, the Finance Act, 2000 revalidated the effect of this Notification w.e.f 12.5.2000 by retrospective amendment. From the above facts, it is evident that in the initial stages of levy of service tax on C & F Agent service, there was occasion for a lot of uncertainty. Under the circumstances, it is difficult to hold that the respondent did not pay the service tax, as a result of wilful suppression to evade payment of service tax. Consequently, we are of the view that the invocation of extended period under the proviso to section 73 is not justified in the present case. Since the show-cause notice in the present case has been issued on 13.6.2001 covering the demand for the period 16.7.1997 to 31.3.1998, we are of the view that the demand is time barred…"

We reported this order as - 2017-TIOL-2897-CESTAT-BANG . 

Aggrieved, Revenue is before the Karnataka High Court.

The Counsel for the appellant Revenue submitted that the Tribunal erred in dropping the demand as time barred as the respondent-assessee had suppressed the facts from the Department.

The High Court extracted the provisions of section 73 of the Finance Act, 1994 and observed -

"11. The above provision is clear as to under what circumstances extended period would apply. That is, where the service tax has not been levied or paid or short-levied or short-paid by reason of fraud or collusion or willful misstatement or suppression of facts or contravention of any of the provisions or of the rules with an intent to evade payment of service tax. But, in the case on hand, the show-cause notice dated 13.06.2001 does not remotely indicate any of the above circumstances under which, time to demand would get extended. On perusal of show-cause notice, it is seen that there is no allegation with regard to fraud, collusion, willful misstatement, suppression of fact nor contravention of any provisions or rules to evade payment of service tax. The ingredients of Section 73 of the Act are conspicuously absent in the show-cause notice. Hence, we are of the opinion that the Tribunal has rightly rejected the appeal filed by the revenue and no ground is made out to interfere with the order passed by the Tribunal."

The Revenue appeal was dismissed.

(See 2018-TIOL-2361-HC-KAR-ST)