2019 (5) TMI 1104 - AT - Service Tax

Short payment of service tax - Transport of Goods by Road Service - suppression of facts or not - invocation of extended period of limitation - HELD THAT - The show cause notice has been issued admittedly beyond the stipulated period of eighteen months - Admittedly, no allegation of suppression has been invoked against the Appellant in the show cause notice. Meaning thereby that the notice has been issued without there being any justification for invoking the extended period of limitation. Section 73 permits extended recovery for a period of upto five years in cases of fraud, collusion, wilful mis-statement, suppression of facts or contravention of the Finance Act or Rules with intent to evade payment of service tax. But for this purpose show cause notice must allege and state fraud, collusion, wilful mis-representation, suppression of facts, etc. - It seems that in this matter the extended period of limitation has been invoked in a mechanical manner without adducing any proof/evidence to establish that provision of Section 73 ibid are attracted. There must be some positive act from the side of the assessee to find wilful suppression. Mere failure to pay duty or disclose a transaction or a mere misstatement is not sufficient for invocation of the extended period of limitation unless it is due to any fraud, collusion or wilful misstatement or suppression of fact or contravention of any provision. There has to be a positive, conscious, and deliberate action intended to evade tax, e.g., a deliberate mis-statement or suppression in order to evade tax. The invocation of the extended period of limitation in the instant matter is erroneous and the show cause notice is itself illegal - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Short payment of service tax, limitation period for issuing show cause notice, suppression of facts, invocation of extended period of limitation.

Analysis:

Short payment of service tax:
The case involves the appellant being a recipient of taxable service for "Transport of Goods by Road Service" and short payment of service tax amounting to ?1,09,945. The Adjudicating Authority confirmed the demand, which was also upheld by the Commissioner on appeal.

Limitation period for issuing show cause notice:
The appellant raised a preliminary issue regarding the limitation period, stating that the show cause notice was issued on 23.02.2015 for a period from October 2012 to March 2013, which exceeded the normal limitation period of 18 months. The appellant argued that there was no mention of fraud or suppression in the notice, and a revised return was filed on 05.05.2015 due to a clerical error. The authorized representative contended that the revised return itself indicated suppression by the appellant.

Suppression of facts:
The issue of suppression was crucial in the case. The Supreme Court rulings emphasized that suppression must involve a deliberate failure to disclose correct information to evade duty. In this matter, the show cause notice was issued beyond the statutory 18-month period without any allegation of suppression. The Tribunal found that there was no justification for invoking the extended period of limitation as there was no proof of fraud, collusion, wilful misrepresentation, or suppression of facts by the appellant. Mere failure to pay duty or disclose a transaction is not sufficient for invoking the extended period unless it is due to fraud or wilful suppression. The Tribunal concluded that there was no suppression on the part of the appellant to warrant the extended period of limitation.

Invocation of extended period of limitation:
The Tribunal held that the extended period of limitation was invoked mechanically without any evidence to establish the grounds required by Section 73 of the Finance Act, 1994. It was emphasized that there must be a positive act of wilful suppression by the assessee to justify invoking the extended period. Since the appellant did not suppress any facts and the notice was based on submitted returns, the Tribunal deemed the invocation of the extended period of limitation as erroneous and illegal. Consequently, the show cause notice was set aside solely on this ground.

In conclusion, the appeal was allowed, and the show cause notice was set aside due to the absence of suppression on the part of the appellant, rendering the invocation of the extended period of limitation unjustified.