2023 (9) TMI 930 - AT - Service Tax

Invocation of extended period of limitation - Suppression of facts or not - Exemption from payment of service tax under the Notification made effective from 01.07.2010 - advance payment received through cheques issued on or before 30.06.2010 but realized after 01.07.2010 - HELD THAT - There is no finding by the Commissioner (Appeals) that this fact had been suppressed by the appellant with an intent to evade payment of service tax. The proviso to section 73(1) of the Finance Act stipulates that where any service tax has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Chapter or the Rules made there under with intent to evade payment of service tax by the person chargeable with the service tax the provisions of the said section shall have effect as if for the word one year the word five years has been substituted. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX. BOMBAY 1995 (3) TMI 100 - SUPREME COURT the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso one of which was suppression of facts. It is in this context that the Supreme Court observed that since suppression of facts has been used in the company of strong words such as fraud collusion or wilful default suppression of facts must be deliberate and with an intent to escape payment of duty. It would transpire from the aforesaid decision that mere suppression of facts is not enough and there must be a deliberate and wilful attempt on the part of the assessee to evade payment of duty. In the absence of any intention to evade payment of service tax which intention should be evident from the materials on record or from the conduct of the assessee the extended period of limitation cannot be invoked. Thus mere non disclosure of the receipts in the service tax return would not mean that there was an intent to evade payment of service tax. In the present case the Commissioner (Appeals) did not even record a finding that the appellant had any intention to evade payment of service tax since all that has been recorded in the impugned order by the Commissioner (Appeals) is that the correct facts came to the notice of the department only when the audit was conducted. In the absence of a finding that suppression of facts was with intent to evade payment of service tax which is absolutely necessary the extended period of limitation could not have been invoked. The entire demand confirmed by the Commissioner (Appeals) falls in the extended period of limitation. Impugned order set aside - appeal allowed.

Summary

Issues Involved:
1. Whether the appellant was entitled to claim exemption from payment of service tax under the Notification effective from 01.07.2010 for advance payments received through cheques issued on or before 30.06.2010 but realized after 01.07.2010.
2. Whether the extended period of limitation could have been invoked in the facts and circumstances of the case.

Summary:

Issue 1: Exemption from Payment of Service Tax
The appellant, engaged in providing construction services, claimed exemption from service tax on advances received before 01.07.2010, as per Notification No. 36/2010-ST. They argued that the cheques dated before 01.07.2010 should be considered as payment received before the cut-off date, despite being honored after 01.07.2010. The department contended that the relevant date for payment receipt is the date of cheque realization, thus denying the exemption. The Additional Commissioner and Commissioner (Appeals) upheld this view, stating that the exemption applies to the amount credited to the government account before 01.07.2010.

Issue 2: Extended Period of Limitation
The appellant argued that the extended period of limitation under the proviso to section 73(1) of the Finance Act should not apply, as there was no willful suppression of facts or intent to evade tax. They believed in good faith that the date of cheque issuance was the relevant date for tax purposes. The department, however, invoked the extended period, claiming suppression of facts detected during an audit.

Findings:
The Tribunal found that the appellant had a bona fide belief, supported by Supreme Court judgments, that the date of cheque issuance was the relevant date for tax purposes. There was no evidence of willful suppression or intent to evade tax. The Tribunal emphasized that suppression must be deliberate and with intent to evade payment of duty, as established in various judicial pronouncements.

Conclusion:
The Tribunal concluded that the extended period of limitation could not be invoked as there was no willful suppression of facts with intent to evade tax. The entire demand confirmed by the Commissioner (Appeals) was within the extended period, and since the necessary conditions for invoking it were not met, the demand was time-barred. Consequently, the Tribunal set aside the impugned order and allowed the appeal.

Order:
The impugned order dated 12.03.2018 passed by the Commissioner (Appeals) was set aside, and the appeal was allowed.