2018 (8) TMI 239 - HC - Service Tax

Time Limitation - Section 73(1) - suppression of facts or not? - 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 - In the present case 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. 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:
- Whether the CESTAT committed an error of law in deciding the issue of limitation based on strong documentary evidence provided by the department?

Analysis:
1. The case involved a Central Excise Appeal under Section 35-G of the Central Excise Act, 1944, where the Revenue appealed against the Final Order passed by the Customs, Excise and Service Tax Appellate Tribunal, Allahabad. The respondent, engaged in news and broadcasting business, was issued a show cause notice regarding non-payment of service tax under reverse charge mechanism for certain services. The issue revolved around the demand for service tax and Cenvat credit wrongly availed by the respondent.

2. The main question of law framed for consideration was whether the CESTAT erred in deciding the issue of limitation, especially concerning the strong documentary evidence provided by the department. The respondent contested the show cause notice on the grounds of limitation, arguing that the extended period of limitation was wrongly invoked by the department.

3. The respondent maintained that they had not suppressed any facts or manipulated information to evade payment of service tax or avail Cenvat credit. They argued that all details were regularly maintained and disclosed in their statutory returns, and the department had access to all necessary information through the records maintained by the respondent in the ordinary course of business.

4. The Commissioner (Excise) adjudicated the show cause notice, rejecting the respondent's claims and confirming the demand for service tax and Cenvat credit, along with penalties and interest. However, the Tribunal overturned this decision, holding that there was no element of suppression or concealment by the respondent to attract the extended period of limitation under the Act.

5. The Tribunal found that the show cause notice was flawed in invoking the extended period of limitation as there was no evidence of suppression or manipulation by the respondent. The Tribunal emphasized that all information required for assessment was available in the respondent's records, and there was no indication of any wrongdoing or intent to evade payment of duty.

6. Ultimately, the High Court affirmed the Tribunal's decision, ruling in favor of the respondent and dismissing the appeal by the Revenue. The Court agreed that the invocation of the extended period of limitation was not justified in this case, as the respondent had not suppressed any vital information or manipulated facts to evade payment of service tax or avail Cenvat credit.

7. The judgment highlighted the importance of maintaining proper records and filing returns regularly to ensure transparency and compliance with tax laws. It also emphasized the need for the department to establish clear evidence of suppression or manipulation before invoking the extended period of limitation for issuing show cause notices.