2020 (4) TMI 382 - AT - Service Tax

Extended period of limitation - Non-payment of service tax - scope of the term suppression of facts - allegation that the Appellant had not paid service tax on receipts from taxable service provided by it at Meghnagar mines during the period 1 June, 2007 to 31 March, 2011 - whether the Department was justified in invoking the extended period of limitation of five years, because admittedly the Show Cause Notice was issued on 3 October, 2012 for the period 1 June, 2007 to 31 March, 2011? - HELD THAT - In the present case, the Department has invoked the extended period of limitation of five years for the reason that the Appellant by not getting themselves registered with the Department and failing to declare the receipts from taxable services rendered to MPSMC appears to have done so with intention of suppressing their value of taxable services rendered and to avoid detection by the Department that they were not paying appropriate service tax . There is no charge in the Show Cause Notice that suppression by the Appellant was wilful , nor does the Show Cause Notice mentions that suppression was with an intent to evade payment of service tax. It is correct that Section 73 (1) of the Act does not mention that suppression of facts has to be wilful since wilful precedes only mis-statement. It has, therefore, to be seen whether even in the absence of the expression wilful before suppression of facts under Section 73(1) of the Act, suppression of facts have still to be wilful with an intent to evade payment of service tax - It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be evoked only when suppression is shown to be wilful with intent to evade the payment of service tax. The demand made for period within one year from the relevant date is justified but taking recourse to the extended period of limitation provided for in the proviso to Section 73 (1) of the Act is not justified - The demand made for the period within the normal period of one year is confirmed but this would have to be determined by the Commissioner afresh within a period of three months after providing an opportunity to the Appellant. The Commissioner shall also determine whether interest or penalty has to be imposed for this period - Appeal allowed by way of remand.

Summary

Issues Involved:
1. Validity of invoking the extended period of limitation under Section 73 of the Finance Act, 1994.
2. Determination of service tax liability for the period within the normal limitation period.
3. Imposition of interest and penalty.

Detailed Analysis:

1. Validity of Invoking the Extended Period of Limitation:
The central issue in this case is whether the Department was justified in invoking the extended period of limitation of five years under Section 73 of the Finance Act, 1994. The Appellant contended that they were unaware that mining services became taxable from 1 June 2007 and only became aware in January 2011. The Department argued that the Appellant's failure to register and pay service tax constituted wilful suppression of facts with intent to evade tax.

The Tribunal noted that Section 73(1) allows for a one-year limitation period for issuing a show cause notice unless the non-payment of tax is due to fraud, collusion, wilful misstatement, or suppression of facts with intent to evade tax, in which case a five-year period applies. The Tribunal highlighted that the show cause notice did not explicitly charge the Appellant with "wilful" suppression of facts or intent to evade tax. The Tribunal referenced several Supreme Court and Delhi High Court decisions, emphasizing that suppression must be deliberate and with intent to evade tax for the extended period to apply.

2. Determination of Service Tax Liability for the Period Within the Normal Limitation Period:
The Tribunal concluded that the extended period of limitation could not be invoked due to the absence of evidence showing wilful suppression or intent to evade tax. Consequently, the demand for service tax for the period within the normal one-year limitation period was justified. The Tribunal directed the Commissioner to reassess the service tax liability for this period.

3. Imposition of Interest and Penalty:
The Tribunal instructed the Commissioner to determine whether interest or penalty should be imposed for the period within the normal limitation period. This determination is to be made afresh within three months, providing the Appellant an opportunity to present their case.

Conclusion:
The Tribunal set aside the impugned order dated 07 July 2014 to the extent that it invoked the extended period of limitation. The appeal was allowed to the extent that the demand for the period within the normal one-year limitation was confirmed, and the Commissioner was directed to reassess the service tax liability and determine the imposition of interest or penalty.