2023 (12) TMI 747 - AT - Service Tax

Invocation of Extended period of Limitation - whether the show cause notice served upon the appellant hits by the time bar limit? - Levy of penalty - HELD THAT - The appellant has otherwise acknowledged the short payment of service tax during the disputed period and has not challenged the quantum of demand proposed and confirmed against the appellant. It is apparent from the record that after receiving the specific information that the appellant has short paid service tax, a letter dated 11.02.2014 was served upon the appellant requiring them to produce requisite documents and to submit the reply with the said specific information. It is very much apparent from the show cause notice itself that the said information/documents were never provided by the appellant to the department. No reason has been brought on record by the appellant nor has been submitted by making submissions even today about the said delay on part of the appellant and about the reason as to why none of those documents were never been provided, the delay for the entire period since February 2014 till April 2018 is held to be appellant s fault. Hence benefit cannot be extended in favour of the appellant for the said fault. Resultantly, it cannot be held that the impugned show cause notice has been issued by invoking the extended period of limitation. Had there been a response by the appellant to the letter dated 11.02.2014, there is nothing on record to even presume that department would have delayed issuing the impugned show cause notice. Levy of penalty - HELD THAT - As already held that the act of appellant amounts to an act of suppression of facts, there is no infirmity in the imposition of penalty under Section 78 of the Finance Act - Though learned counsel had made another submission that the penalty imposed is disproportionate, it has been imposed 100% whereas it is on record that an amount of Rs.8,14,159/- was deposited by the appellant even prior the issuance of show cause notice. On this ground learned counsel has prayed for confining the penalty for the balance amount of Rs. 2.57 lakhs approximately. Since the findings of Para 8 and 9 of the order under challenge have been confirmed and it has been held that there is an intentional suppression on part of the appellant. The only possibility of such suppression is an intent to evade the payment of tax as has been appreciated by Commissioner (Appeals) in Para 9 of the order under challenge. There are no reason to differ from the said findings also. Appeal dismissed.

Summary

Issues:
The issues involved in the judgment are the invocation of the extended period of limitation for service tax liability, failure to provide requisite documents, and imposition of penalty for suppression of facts.

Extended Period of Limitation:
The appellant, engaged in providing taxable services, was asked to provide relevant records about the discharge of their service tax liability for the financial years 2012-13 and 2013-14. Despite being asked multiple times and not responding, a show cause notice was issued proposing recovery of service tax amounting to Rs.78,68,981/-. The appellant contested the invocation of the extended period of limitation, claiming no misrepresentation or evidence of the same against them. The Tribunal observed that the appellant failed to provide the required documents despite repeated requests, leading to the conclusion that the extended period was not wrongly invoked.

Failure to Provide Documents:
The department sent multiple letters requesting documents such as Income Tax Returns, Balance Sheets, and Invoices for the disputed financial years, but the appellant did not provide them. The show cause notice was issued in 2018 after years of non-response from the appellant. The Tribunal held that the delay in providing documents was the appellant's fault, as no reasons were given for the delay from 2014 to 2018. It was concluded that the appellant's failure to respond or provide documents justified the department's actions, and the show cause notice was not issued due to the extended period of limitation.

Imposition of Penalty:
Although the appellant had made some payments before the show cause notice, it was acknowledged that there was still a shortfall in the amount paid. The appellant's failure to disclose relevant information and provide documents was deemed as suppression of facts, justifying the imposition of penalties under Section 77(1)(c) and Section 78 of the Finance Act. The Tribunal upheld the penalty, stating that the appellant's intentional suppression indicated an attempt to evade tax payment. The appeal was dismissed, and the order under challenge was upheld.