By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
fiogf49gjkf0d
Longer period of limitation cannot be invoked and penalties not imposable in absence of suppression with intent to evade tax payment. Recruitment services cannot be taxed before 16-06-2005.
Facts:
The appellant provided computer training to corporate clients as well as students. It also provided recruitment agency services, it allowed its clients to use software owned by itself and provided space for conduct of examination/conference for its clients in relation to recruitment. The demand was confirmed under the above four categories by invoking the extended period of limitation and also confirmed penalty. The appellant contended that computer training services was exempt under the notification 9/2003-S.T. dated 20-06-2003 and therefore not liable to service tax. The said exemption for computer training was withdrawn by 24/2004-S.T. dated 10-09-2004 and later reinstated vide notification 19/2005-ST dated 07-06-2005. The computer training services were not exempt during the period 10- 09-2004 till 07-06-2005 but the Tribunal in the case of Sunwin Techno Solutions Pvt. Ltd. vs. Commissioner 2008 (10) STR 329 held that the computer training services were exempt for the period 10-09-2004 till 07- 06-2005. However, the Supreme Court has reversed the Tribunal’s decision. The appellant in the meantime had paid service tax in relation to computer training provided to corporate clients under the Extra Ordinary Taxpayers Friendly Scheme and its declaration was accepted. Further, they sought clarification from the jurisdictional Assistant Commissioner whether computer training to students was exempt. However, they did not receive any reply. The appellant’s contention in relation to recruitment services was that the definition u/s. 65(68) and 65(105) (k) of the Act was amended only w. e. f. 16-06-2005 and therefore demand prior to the said period is not sustainable. In relation to usage of software the appellant submitted that it is franchise services and not intellectual property services and therefore not liable to service tax during the impugned period. Similarly, the appellant contended it did not provide any business support services and therefore the question of payment of service tax does not arise.
Held:
The Tribunal held that the facts and the action of the appellant seeking clarification indicates clearly that there was no suppression with an intention to evade tax and therefore the demand beyond the normal period and penalty was set aside. Demand under manpower supply services for recruitment is not sustainable for the period before 16-06-2005 and therefore the penalties imposed to be reduced accordingly. The Tribunal upheld the demand and penalty imposed under the intellectual property services as well as business auxiliary services.
