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2022 (11) TMI 100 - AT - Service TaxExtended period of limitation - Short payment of Service Tax - man power supply service - rent a cab service - extended period of limitation - suppression of facts or not - proviso to section 73(1) of the Finance Act, 1994 - HELD THAT - Even though the Additional Commissioner had not dealt with the issue relating to the invocation of the extended period of limitation, the Commissioner (Appeals) observed that the Additional Commissioner had correctly invoked the extended period of limitation. It was absolutely necessary for the Additional Commissioner to form an opinion that the appellant had deliberately suppressed material information with an intention to evade payment of service tax. Unless the Additional Commissioner 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. Likewise, it was also necessary for the Commissioner (Appeals) to form an opinion that the appellant had deliberately suppressed material facts with an intention to evade payment of service tax. 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 Supreme Court in M/S CONTINENTAL FOUNDATION JOINT VENTURE SHOLDING, NATHPA HP VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I 2007 (8) TMI 11 - SUPREME COURT also observed in connection with section 11A of the Central Excise Act, that suppression means failure to disclose full information with intention to evade 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 - Appeal allowed - decided in favor of appellant.
Issues:
1. Invocation of extended period of limitation under the Finance Act for service tax demand. 2. Deliberate suppression of facts to evade payment of service tax. 3. Correct interpretation of the proviso to section 73(1) of the Finance Act. Analysis: Issue 1: Invocation of Extended Period of Limitation The appellant contested the demand raised for service tax on 'man power supply' and 'rent a cab service' for the period 2005-2006 and 2008-2009. The show cause notice invoked the extended period of limitation under the proviso to section 73(1) of the Finance Act, 1994, alleging willful suppression of receipts to evade service tax. The Additional Commissioner confirmed the demand without addressing the issue of limitation, while the Commissioner (Appeals) upheld the extension of limitation period. However, the Commissioner's decision lacked a finding that the appellant deliberately suppressed material facts to evade tax, as required by law. Issue 2: Deliberate Suppression of Facts The Supreme Court's precedent in Pushpam Pharmaceuticals and subsequent cases emphasize that suppression of facts must be deliberate, with the intent to evade payment of duty. Mere failure to declare does not constitute willful suppression; there must be a positive act from the assessee to hide information deliberately. In this case, the Commissioner's decision to confirm the demand for an extended period without proving deliberate suppression of facts by the appellant is legally unsustainable. Issue 3: Correct Interpretation of the Proviso The Supreme Court rulings in various cases stress that the proviso to section 73(1) of the Finance Act should be strictly construed. The burden lies on the authority to prove deliberate suppression of facts with the intent to evade tax when invoking the extended limitation period. Failure to disclose full information with such intent constitutes suppression. The impugned order of the Commissioner (Appeals) failed to meet this legal standard, leading to the appeal being allowed and the order being set aside. In conclusion, the judgment highlights the importance of proving deliberate suppression of facts to extend the limitation period for tax demands. The decision underscores the necessity for authorities to strictly adhere to legal standards when invoking extended periods, ensuring that taxpayers are not unfairly penalized without clear evidence of intentional evasion.
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