2017 (10) TMI 1124 - AT - Service Tax

Extended period of limitation - Section 73 of Finance Act, 1993 - Held that - When the Department has issued the show cause notice on 04/01/2010 for the period of 01/01/2005 to 31/11/2006, the notice is certainly within five year period as provided in the Proviso to Section 73 of Finance Act, 1994, which says that wherever short-levy or short- payment of service tax is because of willful miss-statement or suppression of facts etc, the show cause notice can be issued within five year period of the relevant date. When the facts on record clearly indicate that there was suppression of fact of payment of outward freight by the Appellant from the Department, the show cause notice has rightly been issued on time the time, limit being five years from the relevant date; and the demand has rightly been confirmed by the impugned order. Appeal dismissed - decided against appellant.

Summary

Issues:
- Liability of Service Tax on outward freight
- Time limitation for issuance of show cause notice
- Suppression of facts

Liability of Service Tax on outward freight:
The appellant, engaged in the manufacture of yarn, was registered as a Service Tax assessee for Goods Transport Agency service. The dispute arose from non-payment of Service Tax on outward freight paid to the transporter during the period from 01/01/2005 to 30/02/2006. The appellant's General Manager admitted to not paying Service Tax on outward freight and not disclosing details in the service tax return. The Department issued a show cause notice alleging willful suppression of facts to evade tax, leading to confirmation of the demand by the appellate authorities.

Time limitation for issuance of show cause notice:
The appellant argued that the demand was time-barred as the show cause notice was issued more than two years after they provided information to the department. However, the Tribunal held that the notice was issued within the five-year period as allowed under the Proviso to Section 73 of the Finance Act, 1994. This provision permits the issuance of a notice within five years from the relevant date in cases of willful misstatement or suppression of facts. The Tribunal rejected the appellant's contention that the notice was time-barred due to the suppression of information regarding outward freight payment.

Suppression of facts:
The Tribunal found that there was clear suppression of the fact of payment of outward freight by the appellant to the Department. Despite the appellant's reliance on various case laws, the Tribunal emphasized that the suppression of information regarding taxable value justified the timely issuance of the show cause notice and the confirmation of the demand. Consequently, the Tribunal upheld the impugned order, dismissing the appeal for lack of merit.

In conclusion, the Tribunal ruled that the show cause notice was validly issued within the statutory time limit due to the suppression of facts, leading to the confirmation of the demand for Service Tax on outward freight and penalties. The appellant's arguments regarding the time limitation and case laws were deemed insufficient in light of the established suppression of information.