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2022 (8) TMI 498 - AT - Service TaxExtended period of limitation - submission of appellant is that the extended period of limitation under the proviso to section 73 (1) of the Finance Act could not have been invoked - works contract - suppression of facts or not - HELD THAT - The impugned order does not deal at all with the invocation of the extended period of limitation. It was absolutely necessary for the adjudicating authority to form an opinion that the appellant had deliberately suppressed material information with an intention to evade payment of service tax. Unless the adjudicating authority had come to a conclusion that the extended period of limitation was rightly invoked in the show cause notice, it could not have confirmed the demand for any period beyond the normal period of limitation. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY 1995 (3) TMI 100 - SUPREME COURT , the Supreme Court observed that section 11A of the Central Excise Act empowers the Department to reopen the proceedings if levy has been short levied or not levied within six months from the relevant date but the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. It is, therefore, clear that the suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty. The confirmation of demand for the period beyond the normal period of limitation by invoking the proviso to section 73(1) of the Finance Act cannot be sustained - the impugned order to the extent it has confirmed the demand for the extended period of limitation is set aside. The confirmation of demand for the normal period is, however, sustained - appeal allowed in part.
Issues Involved:
1. Invocation of the extended period of limitation under the proviso to section 73(1) of the Finance Act, 1994. 2. Confirmation of service tax demand for the normal period. 3. Liability for interest and penalty under sections 75 and 78 of the Finance Act, 1994. 4. Inadmissible CENVAT credit. Detailed Analysis: 1. Invocation of the Extended Period of Limitation: The primary issue addressed was whether the extended period of limitation under the proviso to section 73(1) of the Finance Act, 1994, could be invoked. The appellant argued that the extended period could not be invoked as there was no deliberate suppression of facts with the intent to evade payment of service tax. The Supreme Court's precedents in Pushpam Pharmaceuticals, Anand Nishikawa Co. Ltd., and Uniworth Textiles Ltd. were cited, emphasizing that suppression of facts must be deliberate and intentional to evade duty. The Tribunal concluded that the adjudicating authority failed to establish that the appellant had deliberately suppressed information with the intent to evade tax. Therefore, the invocation of the extended period of limitation was deemed unsustainable. 2. Confirmation of Service Tax Demand for the Normal Period: The appellant conceded that the service tax demand for the period within the normal limitation period of 18 months could be confirmed. The Tribunal noted that the service tax liability within the normal period was Rs. 7,413 for works contract services, Rs. 61,800 for demolishing services, and Rs. 2,127 for inadmissible CENVAT credit. Consequently, the demand for the normal period was confirmed. 3. Liability for Interest and Penalty: The show cause notice alleged that the appellant had suppressed taxable value with the intent to evade service tax, thus attracting penalties under sections 75 and 78 of the Finance Act, 1994. However, given the Tribunal's finding that the extended period of limitation was not invokable due to the lack of deliberate suppression, the basis for imposing penalties for the extended period was invalidated. The Tribunal did not specifically address the penalties for the normal period, implicitly confirming them by upholding the service tax demand for that period. 4. Inadmissible CENVAT Credit: The appellant was found to have availed inadmissible CENVAT credit on various grounds, such as lack of original invoices, invoices issued to other parties, and invoices without service tax registration numbers. The Tribunal confirmed the inadmissible CENVAT credit for the normal period amounting to Rs. 2,127. Conclusion: The Tribunal allowed the appeal to the extent that the demand for the extended period of limitation was set aside. However, the confirmation of demand for the normal period was sustained. The appeal was allowed in part, reflecting the Tribunal's adherence to the principles laid down by the Supreme Court regarding the invocation of the extended period of limitation.
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