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2020 (12) TMI 1096 - AT - Service TaxCENVAT Credit - short/delayed payment of service tax - willful statement or willful suppression of facts with an intent to evade payment of service tax - extended period of limitation - Notification dated September 10, 2004 - period October, 2005 to March, 2007 - HELD THAT - It is correct that section 70 of the Finance Act requires every person liable to pay service tax to himself assess the tax on the services provided by him and furnish a return, but at the same time the Circular dated April 23, 2009 also casts a duty on the assessing officer to effectively scrutinize the returns, at least at the preliminary stage. The appellant has been regularly filing the returns and so the Department cannot take a stand that it is only during the audit that it can examine the factual position. Thus, it cannot be urged by the Department that if the officers of the audit team had not conducted the audit, non-payment of service tax would not have been unearthed - It, therefore, follows that the Commissioner (Appeals) was not justified in holding that the extended period of limitation was correctly invoked. The extended period of limitation could not have been invoked in the facts of the present case as facts were not suppressed by the appellant. In regard to the period from October, 2005 to March, 2006, the appellant had submitted working of ST-3 return in the reply to show cause notice, but it has been rejected by the Adjudicating Authority merely on the ground that the working was not supported by any document or a certificate from the Chartered Accountant. The Adjudicating Authority could have asked the appellant to supply the documents, if it was not satisfied with the explanation - The appellant has also stated that the computation of demand in the show cause notice is not correct. In this connection, reference has been made to the Notification dated September 10, 2004 that provides for abatement of 67%. Thus, service tax was effectively payable only on 33% of the gross value. Further, in regard to the period from April, 2006 to March, 2007, the contention of the appellant is that the show cause notice has not explained as to how there was an alleged short-payment of ₹ 1,58,24,365/- during the aforesaid period. According to the appellant, the impugned order has confirmed the demand of ₹ 1,58,24,365/- without considering the TR-6 challans submitted by the appellant in the reply to the show cause notice. The challans have been enclosed with the Appeal. It cannot, therefore, be said that the appellant had any intention, much less willful intention not to pay service tax in regard to the four audit objections referred to the Audit Report - It is, therefore, more than apparent that even otherwise, the appellant did not suppress facts with an intention to wilfully evade payment of service tax. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Advances received prior to 10.09.2004 for construction services. 2. Irregular CENVAT Credit on invoices addressed to unregistered premises. 3. Short-payment of Service Tax for October 2005 to March 2006. 4. Short-payment of Service Tax for 2006-07. 5. Delay in payment of Service Tax from 2004-05 to 2007-08. 6. Invocation of the extended period of limitation under Section 73 of the Finance Act. Issue-Wise Detailed Analysis: 1. Advances Received Prior to 10.09.2004 for Construction Services: The Department contended that the appellant should have paid service tax on advances amounting to ?8,88,75,470/- received before 10.09.2004 for services rendered after 10.09.2004, resulting in a demand of ?90,65,298/-. The appellant argued that liability for service tax on advances arose only after 16.06.2005 with the insertion of Explanation 3 to Section 67 of the Finance Act. The Tribunal agreed with the appellant, citing the Notification dated 10.09.2004 which exempted advances received prior to 10.09.2004 from service tax. 2. Irregular CENVAT Credit on Invoices Addressed to Unregistered Premises: The Department alleged that the appellant availed irregular CENVAT credit of ?24,53,229/- as the invoices were addressed to unregistered premises. The appellant countered that it had applied for centralized registration on 23.02.2006 and was granted registration on 14.02.2007. The Tribunal found that the appellant correctly took credit from the date of application and noted that there was no requirement under the Credit Rules for invoices to be addressed only to registered premises. 3. Short-Payment of Service Tax for October 2005 to March 2006: The Department claimed a short-payment of ?79,18,607/- for this period. The appellant provided a detailed calculation in the reply to the show cause notice, which the Adjudicating Authority rejected for lack of supporting documents. The Tribunal held that the Authority should have requested the necessary documents from the appellant and noted that the calculation of service tax liability, considering the abatement of 67%, showed an excess payment rather than a shortfall. 4. Short-Payment of Service Tax for 2006-07: The Department alleged a short-payment of ?1,58,24,365/- during this period. The appellant argued that the show cause notice did not explain the short-payment and that the impugned order ignored TR-6 challans submitted in the reply. The Tribunal found the appellant's explanation plausible and noted that the appellant had provided evidence of payment. 5. Delay in Payment of Service Tax from 2004-05 to 2007-08: The appellant admitted to the delay in payment and had already deposited the interest amount of ?16,45,973/-. 6. Invocation of the Extended Period of Limitation under Section 73 of the Finance Act: The core issue was whether the extended period of limitation could be invoked. The Tribunal referred to multiple Supreme Court and High Court decisions, emphasizing that "suppression of facts" must be willful and with intent to evade tax. The Tribunal found that the appellant had been regularly filing returns and that the Department could not claim suppression merely because the audit revealed discrepancies. The Tribunal concluded that the extended period of limitation was not justified as there was no willful suppression of facts by the appellant. Conclusion: The Tribunal set aside the impugned order dated June 27, 2014, passed by the Commissioner, and allowed the appeal, ruling that the extended period of limitation could not be invoked and that the appellant did not willfully suppress facts to evade payment of service tax.
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