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When there is a dispute with respect to interpretation of law, any concealment of facts or malafide intention cannot be alleged: CSETAT, Ahmedabad.

Recently, in a case, the Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad held that when there is a dispute with respect to interpretation of law, the malafide intention or concealment of facts cannot be alleged. According to the facts of the case, a company (appellant) which is engaged in the supply of manpower to various industrial organizations as per the arrangements with the service recipients. In the present matter, it was stated in the facts that the appellants would charge 10 percent of the actual wages to be paid to the workers who are hired as their service charges. With this, the company has treated the wages as reimbursable expenses and has discharged the services tax on the ten percent service charges.

In May 2011, the company was served a show cause notice demanding the service tax for the period from 2005-06 to 2009-10 on the basis that the company was required to pay the service tax on the gross value which includes the wages paid to the workers. Countering this, the company submitted that the wages clearly are the reimbursable expenses and since it was not retained, it cannot liable to service tax.

Considering all the facts and circumstances of the case, the court held that the period of dispute i.e., 2005-06 to 2009-10 and show cause notice was issued on 19.05.2011. It is also observed that the appellant has filed their ST-3 return covering the period October 2009 to March 2009 on 27.04.2010. As per the aforesaid facts the entire demand is beyond the normal period and falling under the extended period of limitation. As per the above discussion and findings which is supported by the various judgments on limitation. Therefore, the entire demand is time barred.

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