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2018 (12) TMI 1296 - AT - Service TaxExtended period of limitation - Evasion of service tax - Security Agency service - suppression of facts - Demand of service tax alongwith Interest and penalty - Held that - The issuance of subsequent SCN on the basis of some facts for which earlier show-cause notice was issued and which was finally decided by the Tribunal dropping the penalty on the appellant cannot be done in view of the decision of Hon ble Supreme Court in the case of Nizam Sugar Factory 2006 (4) TMI 127 - SUPREME COURT OF INDIA . This decision of the Hon ble Supreme Court was consistently followed by High Courts and by the Tribunal in various decisions cited supra. In view of the settled position of law, subsequent show-cause notices cannot be issued alleging suppression of facts after all the facts were within the knowledge of the Department when the first show-cause notice was issued. Therefore, the invocation of extended period is not sustainable in law. In the present case, the show-cause notice was issued on 19/10/2006 covering the period from April 2001 to March 2006 and the impugned order also appropriated an amount of ₹ 66,06,843/- being service tax voluntarily paid for the normal period of limitation i.e. April 2005 to March 2006. Further, there are errors in quantification of the service tax as alleged by the appellant. The demand of service tax for the normal period confirmed and the demand for the extended period of limitation set aside - case remanded back to the original authority to quantify the demand for the normal period and the appellant would also be liable to pay interest as per law, if there is a delay in the payment of tax found by the adjudicating authority - appeal allowed in part by way of remand.
Issues Involved:
1. Demand of service tax under Section 73(1) of the Finance Act. 2. Appropriation of service tax paid during investigation. 3. Demand of interest under Section 75 of the Finance Act. 4. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act. 5. Imposition of personal penalties on Managing Director and Joint Director. 6. Invocation of extended period of limitation for demand. 7. Errors in quantification of service tax. Issue-wise Detailed Analysis: 1. Demand of Service Tax: The appellants were charged with evasion of service tax on Security Agency services for the period April 2001 to March 2006, amounting to ?1,79,69,071/-. The Commissioner confirmed the demand under Section 73(1) of the Finance Act, 1994, citing deliberate misdeclaration to evade tax. 2. Appropriation of Service Tax Paid: An amount of ?66,06,843/- paid by the appellants during the investigation was ordered to be appropriated towards the demand. The appellants argued that the demand was based on turnover reported in their books and that a previous show-cause notice covered a similar period, making the new demand unsustainable. 3. Demand of Interest: Interest on the demanded amount was sought under Section 75 of the Finance Act. The appellants contested the demand, arguing that the earlier show-cause notice covered the same period, and all relevant facts were already known to the Department. 4. Imposition of Penalties: Penalties were imposed under Sections 76, 77, and 78 for failure to pay service tax, failure to register, and suppressing facts with the intent to evade tax. The appellants argued that the penalties were unjustified as the facts were already known to the Department from previous investigations. 5. Personal Penalties on Managing Director and Joint Director: Penalties of ?5 lakhs and ?1 lakh were imposed on the Managing Director and Joint Director, respectively. The appellants contended that Section 78A, which provides for personal penalties, was introduced in 2013 and could not be applied retrospectively to the period in question (2001-2006). 6. Invocation of Extended Period of Limitation: The appellants argued that the invocation of the extended period of limitation was unsustainable as all relevant facts were known to the Department during the issuance of the first show-cause notice in 2004. They relied on the Supreme Court's decision in Nizam Sugar Factory, which held that the extended period could not be invoked if facts were already known to the authorities. 7. Errors in Quantification: The appellants claimed that the quantification of the service tax demand was erroneous and that the actual tax payable was less than what was confirmed by the Commissioner. Judgment: The Tribunal found that the Department had already issued a show-cause notice in 2004 for a similar period and facts, which was adjudicated and penalties were dropped by the CESTAT in 2007. The Tribunal held that the subsequent show-cause notice for the period April 2001 to March 2006 was unsustainable as the facts were already within the Department's knowledge. Consequently, the invocation of the extended period was not justified. The Tribunal confirmed the demand of service tax for the normal period (April 2005 to March 2006) and set aside the demand for the extended period. The penalties on the Managing Director, Joint Director, and the company were also set aside. The case was remanded to the original authority for re-quantification of the demand for the normal period, and the appellants were directed to pay interest if there was any delay in tax payment. Conclusion: The appeals were partly allowed, confirming the demand for the normal period and setting aside the demand for the extended period and penalties. The case was remanded for re-quantification of the service tax demand for the normal period.
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