2018 Taxo.online 50

D.B. Central/Excise Appeal No. 5 / 2018 dated 28.02.2018





Central Goods & Services Tax Act, 2017

Section 65 & 73

K.S. Javeri, Justice & Vijay Kumar Vyas, Justice

In favour of assessee

High Court


Represented by: –

Petitioner: – Mr. Anuroop Singhi with Mr. Aditya Vijay

Respondent: –

Order: –

  1. By way of this appeal, the appellant has assailed the judgment and order of the tribunal whereby tribunal has partly allowed the appeal of the assessee.


  1. Counsel for the appellant has framed following substantial question of law:-


“(i) Whether the CESTAT was justified in restricting the demand of Service Tax to normal period despite holding the activity of the assessee to be classifiable under “Business Auxiliary Service” and liable to Service Tax, when the assessee has concealed and suppressed the said information? (ii) Whether the CESTAT was justified in deleting the demand for the extended period and thereby granting benefit to the assessee of its own fault, as the assessee has suppressed the fact of its liability with intent to evade payment of Service Tax?”


  1. The facts of the case are that the appellant is a Govt. company having 100% share holding of State of Rajasthan. The main activity of the appellant is to develop tourism and infrastructure activities in the State of Rajasthan. They have introduced railway transport by the name & style of “Palace on Wheels” and “Royal Rajasthan on Wheels”, to develop the tourism in Rajasthan for people coming from abroad and outside State. They have entered into an agreement with various emporia/shops which come in the way of the journey on the said two trains, for stopping the trains before the said shops to facilitate the passengers to do shopping, etc. The appellant charge a facilitation fee for the said purpose.


3.1 The Revenue entertained a view that the amount received by the appellant in the name of “facilitation fee”, is commission from various shops and emporia for providing services of promoting or marketing or selling of goods provided or belonging to the emporia/shops, is liable to Service Tax under the category of ‘Business Auxiliary Service’ in terms of clause 19(i) of Section 65 of Finance Act, 1994. Accordingly proceedings were initiated against the respondent for confirmation of demand of Service Tax in respect of commission received by them within the period April, 2005 to March, 2010, by way of raising a show cause notice (SCN) dated 20.10.2010.


  1. Counsel for the appellant contended that tribunal has committed serious error in giving contrary finding. He further contended that Section 73 has provided normal period of limitation which has not been extended by the tribunal. Thus, the tribunal has committed error in recording the finding with regard to limitation.


  1. We have heard counsel for the appellant.


  1. While considering the case, the tribunal has rightly observed as under:-


  1. The appellant has advanced the arguments and strongly contended that the demand is hit by time bar in the absence of any positive evidence enumerated in the show cause notice. The show cause notice dated 20.10.2010 has been issued covering the demand for the period April, 2005 to March, 2010. The only reason cited in the show cause notice and the impugned order for invoking the extended time limitation under section 73 for demand of service tax is that the appellant has failed to take registration in the category of ‘Business Auxiliary Service’ and have failed to file the periodic ST 3 returns. In this regard, we note that the definition of ‘Business Auxiliary Service’ was expanded and made much more wide with effect from 10.9.04. The appellant was already paying service tax under various categories and separate litigation was there whether the activity undertaken by the appellant is covered within the definition of ‘tour operators’. It is further on record that the appellant has been subjected to periodical audit repeatedly both by the the department as well as statutory audit by CAG. It is further on record that the appellant is a State Government undertaking which can have no intention to deliberately evade payment of service tax. In view of the above, we are of the view that the demand made in the show cause notice has to be restricted to that falling within the normal time limit under section 73. Demands falling beyond this time period is liable to be set aside.


  1. In view of the above discussions, the activity undertaken by the appellant is held to be classifiable under ‘Business Auxiliary Service’ and liable to Service tax. Demand of service tax is sustained within the normal period of limitation and set aside for the period beyond it. The case is remanded to the original adjudicating authority for requantification of the demand falling within the normal time limit.


  1. We are in complete agreement with the view taken by the tribunal. Therefore, no substantial question of law arises.


  1. The appeal stands dismissed.

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