At, Customs Excise Service Tax Appellate Tribunal New Delhi
By, THE HONORABLE JUSTICE: DR. SATISH CHANDRA
By, (PRESIDENT) AND THE HONORABLE JUSTICE: V. PADMANABHAN
For Petitioner: J.K. Mittal and Rajveer Singh, Advocates And For Respondents: Sanjay Jain, AR
1. The present appeal is directed against the order-in-appeal No. 05/2011 dated 06.01.2011. The appellant is engaged in sale of entry ticket at the airport as per the agreement entered into with Airport Authority of India. The present dispute is for the period 10.09.2004 to 01.03.2005. Show cause notice dated 04.03.2008 was issued demanding service tax amounting to Rs. 40,37,177/- by taking the view that the appellant has rendered "Airport Service" falling under Section 65(105)(zzzzm) read with Section 65(3c) of the Finance Act, 1994. After due process of adjudication the original authority confirmed service tax demand alongwith an order for payment of interest and imposition of penalty under various sections of the Finance Act, 1994. The appellant challenged this order before the Commissioner (Appeals) who vide his impugned order upheld the same. Hence, the present appeal.
2. With the above background, we heard Sh. J.K. Mittal, ld. Counsel for the appellant as well as Sh. Sanjay Jain, ld. A.R. for the revenue.
3. The main grounds on which the impugned order has been challenged are:
(i) The show cause notice dated 04.03.2008 is hopelessly time barred for the reason that the appellant's activities came to the knowledge of the department in the year 2005. Subsequently, the appellant has taken registration in March 2005 and started depositing the service tax w.e.f. 02.03.2005 under the category of "Business Auxiliary Service". The department has issued the show cause notice more than three years from the date of knowledge of the nonpayment and hence the show cause notice is time barred.
(ii) The show cause notice demanded service tax amounting to Rs. 40,37,177/-. However, the service tax confirmed in the impugned order is Rs. 44,37,177/- which is more than the tax demand raised in the show cause notice.
4. Ld. Advocate arguing on behalf of the appellant reiterated the above grounds and submitted that the demand for service tax cannot be sustained since it is hopelessly time barred. He also relied upon the decision of the Hon'ble Delhi High Court in the case of CCE, Delhi-I vs. Sunshine Industries: 2015 (322) ELT 265 (Del.).
5. On the other hand, Ld. AR for the Revenue supported the impugned order. He submitted that the issue is settled in favour of the Revenue by the Hon'ble Supreme Court in the case of P.C. Poulose vs. CC & CE (Appeals) Cochin : 2008 (10) STR 335 (Tri. Bang.). He further argued that the date of knowledge of the department is not relevant for determining the time limit. In cases of suppression the department can issue show cause notice within a period of five years from the date of detection of such evasion. He relied upon the decision of Hon'ble Gujarat High Court in the reported as CCE, Surat-I vs. Neminath Fabrics Pvt. Ltd : 2010 (256) ELT 369 (Guj.), which was affirmed by the Hon'ble Supreme Court.
6. The activity undertaken by the appellant involves collecting airport admission ticket charges as per the licence agreement with the Airport Authority of India. The appellant was permitted to collect fees per visit as airport ticket charges and was allowed to retain the same on payment of licence fees. Department raised demand for service tax under the category of airport services. We find that the issue of levy of service tax on such activity has been settled by the Hon'ble Supreme Court in favour of the Revenue in the case of P.C. Poulose (supra). The Hon'ble Supreme Court decided the issue as follows:
"5. On a very careful consideration of the issue, we find that in terms of a contract between the appellant and the Airport Authority of India, the appellant is authorised to collect entrance fee from the visitors for entering the lounge and availing the various facilities. Just because the appellant is authorised to collect the fee and remit it to the Airport Authority of India, we cannot say that the service is provided by the appellant. Appellant is only collecting agent and whatever is collected after giving the licence fee he retains it. In this case, in our view, the actual liability is only rests with the AAI. In terms of the agreement, AAI may ask the appellant to collect the service tax also. But ultimately the liability rests only with the AAI who is actually providing the service provider. Therefore, we do not find any merit in the demand in respect of the appellant and also there is no justification for imposition of any penalty, especially when the Airport Authority directed him not to collect any service tax until the clarification was received from the Board. Therefore, we do not find any merit in the impugned order of the Lower Authority which has been upheld by the Commissioner (Appeals). Therefore, we allow the appeal with consequential relief".
In view of the above authoritative pronouncement of the Apex Court, the service tax is liable to be paid on the appellant's activity in the category of airport service.
7. The main ground raised by the appellant against the charging of service tax is that the demand is time barred. The claim of the appellant is that non payment of service tax by the appellant came to the notice of the department in the month of March, 2005. It is also on record that the appellant has got himself registered for payment of service tax and started paying tax w.e.f. 02.03.2005. The demand for service tax has been raised under Section 73 of the Finance Act by the Revenue by invoking the extended period of limitation. We note that the said short payment of service tax could be detected only when authorised person of the appellant's company was questioned and his statement was recorded on 08.11.2005 and the department had occasion to scrutinise the agreement with their port authority. On the basis of the details submitted by the appellant on 18.10.2007, the department quantified the service tax recoverable. In fact, in terms of the agreement with the Airport Authority of India the appellant was allowed to recover the entry charges alongwith service tax. The Airport Authority of India also have clarified the issue to the appellant regarding payment of service tax. In this situation, we are of the opinion that the extended period of limitation has been rightly invoked.
8. The appellant has also raised the argument that show cause notice has been issued more than three years after the date of knowledge of the short payment of service tax by the department. Accordingly, they have raised the argument of limitation. However, we note that the proviso to Section 73 of the Finance Act, 1994 empowers the department to demand service tax within a period of five years from the date of issue of
Please Login To View The Full Judgment!
notice in cases where suppression of facts is established. Hon'ble Gujarat High Court in the case of CCE, Surat-I vs. Neminath Fabrics Pvt. Ltd : 2010 (256) ELT 369 (Guj.) has settled the issue that the date of knowledge of the offence by the Revenue officers has no significance in computing the period within which the show cause notice is to be issued. In any case, the Hon'ble Supreme Court has held in the case of Mehta & Co. - 2011-TIOL-17-SC that the show cause notice can be issued within a period of five years of the date of knowledge of suppression. 9. In view of the above discussion, we do not find any reason to interfere with the impugned order and hence the same is upheld. The appeal is consequently dismissed.