2019 (6) TMI 687 - HC - Service Tax

Invocation of Extended period of limitation u/s 78(1) of FA - suppression of facts or not - HELD THAT - The period involved in the present Show Cause Notice is from January 2007 to November 2009. The intimation given to the Department on 19th September 2006, i.e., just before the period for which the demand has been raised. Thus, the Department was at all times during the period for which the demand has been raised were aware of the declaration made by the respondent that they will not be liable to pay the service tax on 41% levy collected from the contractee and paid over to the Grocerty Market and Shop Board. The finding of fact arrived in the impugned order of the Tribunal is that there has been no suppression of facts invoke the extended period of limitation cannot be said to be perverse - Appeal dismissed.

Summary

Issues:
Challenge to order under Section 83 of the Finance Act, 1994 and Section 35G of the Central Excise Act, 1944 regarding the extended period of limitation under Section 78(1) of the Finance Act, 1994.

Analysis:
The appeal before the Bombay High Court challenged the Customs, Excise and Service Tax Appellate Tribunal's order dated 7th May 2018. The main issue raised was whether the Tribunal was justified in holding that the extended period of limitation under Section 78(1) of the Finance Act, 1994 would not apply. The respondent, a Manpower Recruitment or Supply Agency Services provider, had paid service tax on wages to employees and collected a 41% levy from the contractee, deposited with Grocery Markets and Shop Board. The respondent had informed the Department in September 2006 that the 41% levy was not part of taxable value for service tax payment.

The Revenue issued a Show Cause Notice in 2012 to recover service tax on the 41% levy collected by the respondent from January 2007 to November 2009, alleging suppression. However, the Tribunal found that the respondent had informed the Department in 2006 about not being liable to pay service tax on the 41% levy. The Tribunal held that there was no suppression by the respondent, and thus, the demand was barred by limitation. The appellant argued that the 2006 letter does not absolve the respondent from suppression of facts for invoking the extended period of limitation.

The High Court noted that the Department was aware of the respondent's declaration before the period for which the demand was raised. Therefore, the finding of the Tribunal that there was no suppression to invoke the extended period of limitation was not considered unreasonable. The Court concluded that the proposed question did not raise a substantial question of law and dismissed the appeal.