2019 (6) TMI 905 - AT - Service Tax

Construction of Residential Complex Service - service tax collected from the prospective buyers and were not deposited with the exchequer - suppression of facts or not - extended period of limitation - HELD THAT - The appellants had collected service tax and not deposited the same at the relevant time and in the entire period from 31 July 2010 to 31 March 2015 appellant never paid due service tax on due date. Further the allegations of suppression are therefore proved and since the appellant had not deposited service tax on due date and not paid interest when deposited belatedly intention to evade is established - demand upheld. Appeal dismissed - decided against appellant.

Issues Involved:
1. Non-payment of service tax by the appellant.
2. Invocation of extended period of limitation due to alleged suppression of facts.
3. Imposition of penalties on the appellant and its director.
4. Appropriation of already deposited service tax.
5. Demand for interest on delayed payment of service tax.
6. Classification of advances as loans or taxable services.

Issue-wise Detailed Analysis:

1. Non-payment of Service Tax:
The appellants were engaged in providing taxable services under the category of 'Construction of Residential Complex'. A search conducted on 01 August 2012 revealed that the appellant was collecting service tax from buyers but not depositing it with the exchequer. The show cause notice dated 30 March 2015 alleged that the appellant received ?428,58,76,761/- from customers between July 2010 and March 2014, with a service tax liability of ?12,81,63,138/- which was not deposited timely. The appellant admitted the non-deposition of service tax and subsequently discharged the liability using cash and Cenvat Credit.

2. Invocation of Extended Period of Limitation:
The show cause notice invoked the extended period of limitation, alleging suppression of facts and intention to evade payment of service tax. The appellant was accused of not declaring their taxable activities and considerations received in their returns, thus escaping proper assessment of service tax. The appellant registered with the Service Tax Department only on 27 June 2011, despite providing taxable services since July 2010.

3. Imposition of Penalties:
The Original Authority confirmed the demand of service tax and imposed penalties under various sections of the Finance Act, 1994. The penalties included ?13,73,04,094/- under Section 78 for deliberate suppression of facts, ?10,000/- under Section 77(1)(a), ?10,000/- under Section 77(1)(b), and ?1,55,000/- for delayed submission of ST-3 returns. Additionally, a penalty of ?1,00,000/- was imposed on the director under Section 78A, and ?10,000/- under Section 77C for failing to furnish information and appear before Central Excise Officers.

4. Appropriation of Already Deposited Service Tax:
The Original Authority appropriated the amount of ?12,81,63,138/- already deposited by the appellant against the confirmed demand. The appellant argued that the demand, if confirmed, should not be adjusted towards the amount already paid.

5. Demand for Interest on Delayed Payment of Service Tax:
The show cause notice demanded interest of ?1,26,89,777/- under Section 75 of the Finance Act, 1994, for delayed payment of service tax amounting to ?12,81,63,138/-. The appellant contended that interest amounting to ?1,22,95,473/- was already paid for late deposit of service tax. However, the Tribunal noted that interest was not paid before the issuance of the show cause notice, and the service tax payable was not paid on due dates, justifying the demand for interest.

6. Classification of Advances as Loans or Taxable Services:
The appellant argued that the advances received were loans from various parties and not advances from customers, thus not liable for service tax. The Original Authority, however, confirmed the demand of ?91,40,956/- on advances received from customers, as these were not declared as loans in income tax documents.

Conclusion:
The Tribunal upheld the impugned Order-In-Original, confirming the demand for service tax, interest, and penalties. The Tribunal rejected the appellant's contention that penalties should not be imposed as the tax along with interest was deposited before the issuance of the show cause notice. The Tribunal also found that the appellant had collected service tax but failed to deposit it timely, proving the allegations of suppression and intention to evade payment. Consequently, both appeals were rejected.

Order Pronounced in the open Court on 18 June, 2019.

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