2019 (5) TMI 1458 - AT - Service Tax

Extended period of limitation - Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded - suppression of fats or not - whether the extended period of limitation for issuance of a show cause notice under the proviso to Section 73(1) of the Finance Act, 1994 could have been invoked in the facts and circumstances of the case? HELD THAT - In the present case it needs to be noted that notice merely mentions that the extended period of five years was being invoked as the assessee suppressed the facts from the department. The show cause notice does not allege that the suppression was with an intention to evade payment of Service Tax. It was, therefore, pleaded by the Appellant in reply to the show cause notice that the extended period of limitation could not be invoked. This plea is also mentioned in paragraph 10 of the impugned order - This has, however, not been considered by the Adjudicating Authority in the impugned Order. The Commissioner completely failed to appreciate that the extended period of five years could have been invoked only when the appellant suppressed facts with an intent to evade payment of Service Tax. All that has been observed by the Commissioner is that Cenvat Credit in respect of Goods and Transport Services was wrongly taken by the Appellant. This would not be sufficient to attract the extended period of limitation. The benefit of the proviso to Section 73(1) could be taken only when there was an explicit averment in the show cause notice that there was suppression of facts with an intent to evade payment of duty. In the absence of such an averment, the extended period of limitation could not have been invoked. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Invocation of the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994.
2. Requirement of intent to evade payment of service tax for invoking the extended period of limitation.
3. Justification for the demand of interest and penalty on the reversed Cenvat credit.

Detailed Analysis:

1. Invocation of the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994:
The central issue in the appeal was whether the extended period of limitation for issuing a show cause notice could be invoked. The show cause notice dated 18 June 2009 was issued based on an internal audit for the period 01 April 2004 to 31 March 2006, which found that the appellant had wrongly availed Cenvat credit amounting to ?94,75,098/- on 'Goods Transport Agency Services' in September 2005. The appellant reversed the credit in March 2007 but did not pay the interest. The show cause notice invoked the extended period of five years under the proviso to Section 73(1) of the Finance Act, 1994, alleging suppression of facts by the appellant.

2. Requirement of intent to evade payment of service tax for invoking the extended period of limitation:
The appellant argued that the extended period of limitation under the proviso to Section 73(1) could only be invoked in cases of wilful suppression with intent to evade payment of service tax, which was not alleged in the show cause notice. The Supreme Court's decisions in Pushpam Pharmaceuticals, Associated Cement Companies Limited, and Uniworth Textiles Limited were cited, establishing that suppression must be deliberate and with intent to evade duty. The impugned order did not address this requirement, merely stating that the appellant had wrongly availed Cenvat credit and filed incorrect returns.

3. Justification for the demand of interest and penalty on the reversed Cenvat credit:
The appellant's counsel contended that the Commissioner failed to justify the invocation of the extended period of limitation and the consequent demand for interest and penalty. The show cause notice did not contain any explicit averment of wilful suppression with intent to evade payment of service tax, which is a prerequisite for invoking the extended period. The impugned order did not consider this crucial aspect, and the mere wrongful availment of Cenvat credit was insufficient to attract the extended period of limitation.

Conclusion:
The Tribunal concluded that the suppression of facts must be deliberate and with intent to evade payment of duty for the extended period of limitation to apply. The show cause notice lacked allegations of such intent, and the impugned order did not address this requirement. Consequently, the extended period of limitation could not be invoked. The Tribunal set aside the order dated 16 February 2010 passed by the Commissioner of Service Tax and allowed the appeal.

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