2025-VIL-1865-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Applicability of Service Tax in Jammu & Kashmir – Appellate provided Passive Infrastructure Support Services to telecom operators from its branch office in Jammu & Kashmir (J&K) – Demand of service tax under categories such as Business Support Services, Management and Consultancy Services, and Manpower Security Services - Whether the services provided by the appellant in the State of J&K are subject to service tax under the Finance Act, 1994 – HELD - The services provided by the appellant in J&K are not subject to service tax under the Finance Act, 1994 as Section 64 of the Finance Act clearly provides that the provisions of Chapter V (which deals with service tax) do not extend to the State of J&K. When the services are rendered in J&K, which falls outside the purview of the Finance Act, the application of the Place of Provision of Services (POPS) Rules is inapplicable. The POPS Rules cannot override the statutory provisions of the Finance Act. Accordingly, the demand proposed and confirmed by the Respondent in the Impugned Order based on the POPS Rules is unsustainable and quashed – The services provided by the appellant in the State of J&K are not subject to service tax under the Finance Act, 1994 - The impugned order is set aside and the appeal is allowed - Whether the extended period of limitation can be invoked in the present case – HELD - The invocation of the extended period of limitation is not justified as the appellant had been regularly filing ST-3 Returns and disclosing the transactions as "exempted service." Further, the Department was well aware of the transactions entered into by the appellant since the proceedings were initiated based on the disclosures made by the appellant in their financial statements and service tax returns. The extended period of limitation cannot be invoked when the matter pertains to the interpretation of legal provisions. Accordingly, the invocation of the extended period of limitation is set aside.
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