2018 (10) TMI 1257 - AT - Service Tax

Short payment of Service Tax on account of enhancement in rate of tax - erection, commissioning and installation service - differential rate of tax - the Service Tax rate for the period upto 31st March, 2012 was at the rate of 10.30%. However, w.e.f. 01.04.2012, the Service Tax rates were enhanced to 12.36% - Held that - It was the incumbent duty of the appellant to make good the deficiency for the disputed period since when the said enhancement had come into effect. But the appellant opted to not to make good the short levy even at the time of filing his ST-3 Return in November, 2012. The said short payment was never subsequently informed by the appellant on his own to the Department. Resultantly, the same was never in notice of the Department unless and until they conducted the audit of appellants record and observed the impugned short levy. The appellant could have well complied with the above provision at the time of filing his return for the disputed period in November, 2012. The failure on his part amounts to violation of the provisions of the Act. Non-disclosure of the impugned admitted short-levy till the audit conducted by the Department is definitely a suppression of relevant fact arising out of appellants own fault. The possibility of said suppression with clear intention to evade the said short payment cannot therefore be ruled out. It is rather held that the appellant despite acquiring knowledge of the rate of duty being enhanced has failed to make good the deficiency for the disputed period. The appellant herein had deliberately not made the payment for the impugned period - Demand has rightly been confirmed with the appropriate interest and the proportionate penalties - Appeal dismissed - decided against appellant.

Summary

Issues:
1. Short payment of Service Tax by the appellant for the period April 2012 to June 2012.
2. Allegation of wilful suppression by the Department.
3. Appellant's defense against the alleged suppression.
4. Applicability of extended period of limitation.
5. Arguments based on relevant case laws.
6. Department's rebuttal regarding the suppression of facts.
7. Justification for the order under challenge.

Short Payment of Service Tax:
The appellant, engaged in works contract services, was found to have short-paid Service Tax amounting to ?2,50,232 for the period April 2012 to June 2012 due to a change in the Service Tax rate from 10.30% to 12.36% effective April 1, 2012. A show cause notice was issued, and the recovery of the short payment, interest, and penalty was confirmed by the Assistant Commissioner and upheld by the appellate authority.

Allegation of Wilful Suppression:
The Department alleged wilful suppression by the appellant for not paying the revised rate of Service Tax despite being aware of the change. The appellant argued that there was no intention to evade tax and that they started paying at the revised rate once they became aware of it.

Appellant's Defense:
The appellant contended that there was no deliberate suppression of information as they were unaware of the rate change initially and promptly rectified the payment once informed. They argued that the show cause notice was time-barred and that the demand was not sustainable for a short period of three months.

Extended Period of Limitation:
The Department justified invoking the extended period of limitation due to the appellant's failure to disclose the short payment until after an audit, indicating a deliberate act of suppression to evade tax.

Relevant Case Laws:
The appellant cited relevant case laws to support their argument of no deliberate suppression, emphasizing the need for a deliberate act to establish suppression of facts.

Department's Rebuttal:
The Department countered the appellant's arguments, stating that the appellant was aware of the rate change since July 2012 and failed to rectify the payment discrepancy until after the audit, which constituted suppression of facts.

Justification for the Order:
The presiding Member observed that the appellant had knowledge of the rate change but did not rectify the payment discrepancy, violating the self-declaration and self-discharge requirements. The failure to disclose the short payment until after the audit was deemed suppression with an intention to evade tax, leading to the confirmation of the demand with interest and penalties.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive understanding of the case and the arguments presented by both parties.