At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai
By, THE HONORABLE JUSTICE: SULEKHA BEEVI C.S.
By, MEMBER AND THE HONORABLE JUSTICE: MADHU MOHAN DAMODHAR
For Petitioner: T.R. Ramesh, Advocate And For Respondents: K.P. Muralidharan, AC (AR)
1. The appellants were engaged in providing services of cleaning, housekeeping and other general conservancy services to BSNL and Trichy Airport. Department took the view that these services are taxable w.e.f. 16.06.2005 under the category of "cleaning activity services". Accordingly, proceedings were initiated against the appellant proposing demand of tax liability amounting to Rs. 27,34,988/- for the period 16.06.2005 to 30.11.2006 along with interest liability and imposition of penalties under various provisions. After due process of adjudication, original authority vide order dt. 26.03.2008 confirmed the proposed demand along with interest and also imposed penalties under Sections 76, 77 & 78 of the Finance Act, 1994. In appeal, Commissioner (Appeals) vide impugned order dt. 08.09.2009 upheld the order of original authority and rejected the appeal. Hence appellants are before this forum.
2. Today, when the matter came up for hearing, on behalf of the appellant, Ld. Advocate T.R. Ramesh submits that appellant had entered into separate agreements with BSNL, Trichy and BSNL Karaikudi for providing housekeeping and general conservancy services for their administrative and other technical buildings. Similar services had been provided to other BSNL installations. They had also separate agreements with Airport Authority of India (AAI) for upkeeping of terminal building and other complexes of Trichy Airport. Ld. Advocate submits that at this point of time, they do not have relevant records to support the stand that they had only provided housekeeping services, for which reason, they concede that tax liability is applicable on them under the head "cleaning activity services'. However, the ld. Advocate contends that they were not aware of the tax liability for the said services which was introduced only 16.06.2005, for which reason the extended period of limitation should not be invoked. He also submits that adjudicating authority has not extended the benefit of exemption limit applicable to them as a small service provider. He also contends that as they have not collected any tax on these services from BSNL or from AAI, cum tax benefit should be extended to them while calculating their net tax liability. He also submits that they were providing services to government departments and in absence of any evidence that assessee had billed or that they received service tax amount from such departments, penalties are not imposable as has been held by the Tribunal in the case of Rajasthan Ex-servicemen Ltd. Vs. CCE Jaipur : 2017 (52) STR 42 (Tri.-Del.).
3. On the other hand, Ld. A.R. supports the impugned order. He further submits that invocation of extended period is very much justified since the appellant had not taken registration nor filed any returns with the department.
4. Heard both sides and have gone through the facts. We are unable to find much merit in the prayer of Ld. Advocate concerning invocation of extended period. It is not the case that they had approached the department at any time on their doubt whether the activities come under the ambit of service tax liability. We therefore hold that the invocation of extended period in this case is legally correct and the appellant cannot escape on the liability for such period.
5. However, on the prayer of the appellants concerning extending cum-tax benefit and small service provider exemption, we do find that there are sufficient mitigating factors in their favour. There is no allegation that appellants have billed or collected service tax amounts from BSNL or AAI. This being so, we are of the considered opinion that tax liability should be calculated after extending exemption limits available to small service providers and allowing cum tax benefit on the liabilities so arrived at. So ordered. For the limited purpose of recalculating tax liability on these lines, we remand the matter back to the original authority. Needless to say that the said authority will give sufficient opportunity to the appellant to present their case, including submission of additional documents, if any.
6. Coming to the matter of penalty, we find that the Tribunal decision in the case of Ra
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jasthan Ex-servicemen Ltd. relied supra by the ld. Advocate is very much on the point. The Tribunal in that case has relied upon a number of other Tribunal decisions on the same issue. Accordingly, we find that penalties imposed under Section 76 & 78 of the Finance Act are an overkill and will require to be set aside, which we hereby do. However, we do not interfere with the penalty imposed under Section 77 ibid. Appeal is disposed of on the above terms.