2017 (7) TMI 1187 - HC - Service Tax

Extended period of Limitation - Section 73(1) of Finance Act - Whether the CESTAT has committed an error of law in deciding the issue of limitation, especially on account of strong documentary evidence provided by the Department? Held that - The period covered by the SCN was from January 1, 2010 to March 19, 2010. The SCN was dated 31.03.2013. Similarly, for demand pertaining to development and supply of content service the period involved was 2007-08 to 2010-11 and the SCN was issued after eighteen months limitation period invoking the extended period of limitation. The reason given for invoking the extended period was that above facts came to the notice of the Department only during scrutiny of records e.g. ledger, balance sheet, invoices, cenvat credit accounts etc., maintained by the respondent and such details were not disclosed to the department at any stage in any report or returns and thus, the respondent had suppressed the facts and the proviso to Section 73(1) of the Finance Act, 1994 was applicable to the instant case. SCN itself shows that every details was maintained by the respondent in their usual course of years. They had not suppressed or manipulated any fact to evade the payment of service tax or to avail Cenvat credit. When the ingredients of proviso to Section 73 (1) of the Act were not present, the invocation of extended period of limitation was not correct to issue SCN. Appeal dismissed - decided against Revenue.

Summary

Issues involved:
- Whether the CESTAT committed an error of law in deciding the issue of limitation based on documentary evidence provided by the department?
- Whether the extended period of limitation was correctly invoked for issuing the show cause notice (SCN)?
- Whether the respondent suppressed vital information in statutory returns, justifying the invocation of the extended period of limitation?
- Whether the Tribunal's decision on the absence of suppression, concealment, or evasion of duty was correct?
- Whether the Tribunal's decision to set aside the Commissioner's order was justified?

Analysis:

1. Issue of Limitation and Error of Law by CESTAT:
The Central Excise Appeal was filed by the Revenue against the Customs, Excise and Service Tax Appellate Tribunal's (CESTAT) decision to allow the appeal of the respondent-assessee. A question of law was framed regarding whether CESTAT erred in deciding the issue of limitation, especially concerning documentary evidence provided by the department.

2. Extended Period of Limitation and SCN Issuance:
The respondent, engaged in news business and broadcasting, received a show cause notice (SCN) for non-payment of service tax under reverse charge mechanism. The department invoked the extended period of limitation, alleging suppression of facts by the respondent. The respondent contested that the SCN was time-barred and that the extended period should not have been applied.

3. Suppression of Information and Extended Period:
The Commissioner (Excise) upheld the SCN, citing suppression of vital information in statutory returns. The respondent argued against suppression, stating that all details were regularly filed with the Department. The Tribunal later held that there was no suppression or evasion of duty, leading to the rejection of the extended period of limitation.

4. Tribunal's Decision and Commissioner's Order:
The Tribunal set aside the Commissioner's order, emphasizing that there was no suppression or manipulation by the respondent to evade tax payment. The Tribunal found no grounds for invoking the extended period of limitation, ultimately ruling in favor of the respondent.

5. Final Judgment and Answer to Question of Law:
The High Court affirmed the Tribunal's decision, dismissing the appeal filed by the Revenue. It was concluded that the respondent had not suppressed any information to evade tax payment, and the extended period of limitation was incorrectly invoked. The question of law was answered in favor of the assessee, leading to the dismissal of the appeal.

In summary, the judgment revolved around the issues of limitation, suppression of information, and the correctness of invoking the extended period for issuing the show cause notice. The Tribunal's decision to set aside the Commissioner's order was upheld by the High Court, ruling in favor of the respondent and dismissing the appeal by the Revenue.