2019 (2) TMI 587 - AT - Service Tax

Penalty u/s 76 and 78 of FA - Non-payment of service tax - expenses incurred against outward transportation of cement dispatched - Held that - The audit in this case was done in the year 2009 vide a letter dated 15.04.2009. The appellant himself had given an undertaking to produce all the relevant documents as far as the receipt of payments towards freight by the appellant is concerned but the appellant had miserably failed to stand upon the said undertaking. It is appellant s own case that the tax proposed vide SCN dated 08.01.2010 was deposited by him in October 2010. There is no apparent document on record reflecting the said intimation to the Department. Since the audit till the date of said payment, there was more than one year of period available with the appellant to cooperate the Department and to submit the documents but there was no compliance/ intimation on part of appellant. The option of the appellant to remain silent, to my opinion, is sufficient to reflect that non payment of tax was not mere unawareness of the impugned liability on the part of the appellant but the appellant under the garb of said unawareness was not inclined to discharge his liability. No doubt mere non payment of tax liability cannot amount to suppression of fact but as discussed above the act of appellant of concealing relevant documents despite being afforded with the opportunity is definitely a positive act on his part to prove the alleged suppression of facts. Admittedly, ST-3 returns were also silent about the receipt of impugned income - penalty upheld - appeal dismissed - decided against appellant.

Summary

Issues:
1. Liability to pay service tax on outward transportation expenses incurred by the appellant.
2. Imposition of penalties under Sections 76 and 78 of the Finance Act, 1994.
3. Applicability of the extended period of limitation for tax demand.

Issue 1: Liability to pay service tax on outward transportation expenses:
The appellant, engaged in the manufacture of cement, was found to have not paid service tax on outward transportation expenses amounting to ?58,18,829 incurred during specific periods. The Department issued a show cause notice proposing the recovery of service tax, interest, and penalties. The appellant argued that the tax was paid upon receiving the notice, attributing the non-payment to unawareness of the liability. The Department contended that the appellant concealed relevant documents and payments in their returns, justifying the invocation of the extended period of limitation. The Tribunal noted the appellant's failure to cooperate despite multiple reminders and upheld the imposition of penalties.

Issue 2: Imposition of penalties under Sections 76 and 78:
The appellant argued against the imposition of penalties, claiming unawareness of the tax liability and lack of intent to evade duty. However, the Department asserted that the appellant's conduct of concealing documents and payments indicated a deliberate attempt to evade tax. The Tribunal found that the appellant's silence and failure to provide evidence reflected a positive act of suppression, justifying the penalties imposed under Sections 76 and 78. The discrepancy in the penalty amount under Section 78 was deemed a typographical error and corrected.

Issue 3: Applicability of the extended period of limitation:
The appellant contended that the Department was not entitled to invoke the extended period of limitation for the tax demand, citing the delay in proposing the demand compared to the audit date. However, the Department argued that the appellant's actions warranted the extended period due to suppression of facts. The Tribunal agreed with the Department, emphasizing the appellant's failure to cooperate and submit necessary documents despite opportunities provided. The non-payment of tax was deemed intentional, leading to the affirmation of the penalties and dismissal of the appeal.

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