2019 (1) TMI 253 - AT - Service Tax

Non-payment of service tax - payment made on being pointed out - suppression of facts or not - extended period of limitation - Held that - The said payment was made on 27.09.2013 itself. Since it was made beyond the prescribed period, the interest thereupon was also paid on 14.10.2014. It is also apparent that prior to the impugned order the Department has twice earlier conducted the audits of the assessee - the fact had not come to the notice of the Department for the first time. The question of suppression of fact or mis-representation thereof does not arise. Hence, the Department is not entitled to invoke the extended period as mentioned in proviso to Section 73 of the Act - It is the settled law that the burden of proving the alleged suppression is on the Department and the same has to be proved by way of cogent evidence about some positive act on the part of appellant to not to discharge his liability. There is no such evidence on record. Time Limitation - Held that - The impugned Show Cause Notice was issued on 27.06.2016 and period in dispute is 2012-13, i.e. much beyond the normal period of one year. Hence, the same is barred by limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Barred by time Show Cause Notice
- Allegations of suppression of facts
- Applicability of penalty
- Law of limitation
- Statutory provision post amendment in Section 80
- Burden of proof on the Department

Barred by time Show Cause Notice:
The appellant argued that the Show Cause Notice was time-barred as it was issued on 27.06.2016 for a period between April 2012 and March 2013. The Department had conducted audits earlier, indicating false allegations of suppression. The appellant requested the order to be set aside and the appeal to be allowed.

Allegations of suppression of facts:
The Department contended that the non-payment of service tax by the appellant was discovered during an audit, indicating suppression. The Assistant Commissioner emphasized that without the audit, the non-payment would not have surfaced, justifying the imposition of penalties. The Department relied on case laws cited by the Commissioner Appeals to support their stance.

Applicability of penalty:
The appellant argued against the imposition of penalties, stating that the Department had prior knowledge of the activities, and there was no evidence of willful suppression on their part. The burden of proving suppression was on the Department, which lacked cogent evidence to support their claim.

Law of limitation:
The Tribunal observed that the Show Cause Notice issued in 2016 for a period in dispute from 2012-13 was beyond the normal one-year limitation period. The appellant had paid the service tax and interest post-audit, which was considered in light of the amendment in Section 80 of the Central Excise Act.

Statutory provision post amendment in Section 80:
The Tribunal highlighted the statutory requirement post-amendment in Section 80, stating that if duty and interest were paid before the Show Cause Notice, no adjudication was necessary. Both lower authorities overlooked this provision, emphasizing that mere non-deposit of service tax without audit was not sufficient for penalty imposition.

Burden of proof on the Department:
The Tribunal emphasized that the burden of proving suppression rested with the Department, requiring evidence of willful intent to evade duty. Previous audits and adjudications indicated that the Department was aware of the appellant's activities, negating the presence of suppression. The Order of Commissioner(Appeals) was set aside, and the appeal was allowed.