2020 (2) TMI 222 - AT - Service Tax

Extend period of limitation - Short payment of service tax - wilful suppression of facts - willful suppression the value of the service provided in the ST-3 Returns - issuance of SCN by invoking proviso to Sub-Section (1) of Section 73 of Finance Act, 1994 - HELD THAT - It is very clear that the allegation is to the effect that appellant had suppressed value and such suppression was allegedly as compared to the entries in the balance sheet - This Tribunal has repeatedly held that if the information is available in the balance sheet which is a public document then allegations of suppression cannot sustain. It is noted that the appellant had filed ST-3 Return and the allegation is on the basis of information available in the public document i.e. balance sheet. Therefore, the suppression is not established. Appeal allowed - decided in favor of appellant.

Summary

Issues: Allegation of willful suppression of value in service tax returns leading to short payment of service tax; Availability of extended period for demand of service tax; Validity of show cause notice and demand for service tax; Applicability of penalties under various sections of the Finance Act, 1994.

Allegation of Willful Suppression of Value in Service Tax Returns:
The case involved allegations of willful suppression of value in service tax returns by the appellant, leading to short payment of service tax. The Revenue claimed that there was a difference in the value shown in the ST-3 Returns filed by the appellant compared to the entries in the balance sheet. The show cause notice dated 01 April, 2016, detailed the alleged suppression of taxable value under various heads of the Profit & Loss Account, resulting in a short payment of around ?19 lakhs. The Revenue contended that the appellant had willfully suppressed the value of taxable service to evade payment of service tax. However, the Tribunal noted that the information regarding the alleged suppression was available in the balance sheet, which is a public document. The Tribunal held that if the information is available in a public document like the balance sheet, allegations of suppression cannot be sustained. Therefore, the Tribunal concluded that suppression was not established, and the extended period was not available to the Revenue.

Availability of Extended Period for Demand of Service Tax:
The Revenue had invoked the proviso to Sub-Section (1) of Section 73 of the Finance Act, 1994, to issue the show cause notice demanding the alleged short payment of service tax. However, the Tribunal observed that since the allegation of suppression was based on information available in the balance sheet, the extended period for demand of service tax was not applicable. The Tribunal emphasized that suppression could not be upheld when the information was readily available in a public document. Consequently, the Tribunal held that the extended period was not available to the Revenue in this case.

Validity of Show Cause Notice and Demand for Service Tax:
The show cause notice dated 01 April, 2016, demanded around ?19 lakhs from the appellant for the alleged short payment of service tax. The Original Authority confirmed the demand, which was subsequently reduced by the learned Commissioner (Appeals) to around ?17 lakhs. The appellant then approached the Tribunal challenging the order. After hearing both parties and examining the record, the Tribunal found that the allegation of suppression was not sustainable as the information was available in the balance sheet. Therefore, the Tribunal held that the impugned order confirming the demand was not sustainable. Consequently, the Tribunal set aside the order and allowed the appeal in favor of the appellant.

Applicability of Penalties under Various Sections of the Finance Act, 1994:
The show cause notice also sought penalties under various sections of the Finance Act, 1994, including Section 76, Section 75, Section 77(1)(d), Section 77(1)(c), Section 77(2), and Section 78. However, since the Tribunal found that the allegation of suppression was not established, it also held that the penalties sought by the Revenue were not applicable in this case. The Tribunal's decision to set aside the demand for service tax also implied that the penalties associated with the alleged suppression were not justified. Therefore, the Tribunal did not uphold the imposition of penalties under the mentioned sections of the Finance Act, 1994.

In conclusion, the judgment by the Appellate Tribunal CESTAT ALLAHABAD addressed the issues of alleged willful suppression of value in service tax returns, the availability of the extended period for demand of service tax, the validity of the show cause notice and demand for service tax, and the applicability of penalties under various sections of the Finance Act, 1994. The Tribunal ruled in favor of the appellant, holding that the allegation of suppression was not sustainable as the information was available in the balance sheet, a public document. Consequently, the Tribunal set aside the demand for service tax and did not uphold the imposition of penalties sought by the Revenue.