2023 (12) TMI 1004 - AT - Service Tax

Non-payment of service tax - providing non-scheduled operation of aircraft for the period upto 30.11.2009 by making the services of aircraft available to various entities for travelling to places in India pre-fixed and pre-intimated on payment of charges, based on duration and destination - suppression of facts or not - invocation of extended period of limitation - HELD THAT - In Pushpam Pharmaceuticals Company 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. 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. This issue was also examined at length by this Bench in M/s G.D. Goenka Private Limited vs. The Commissioner of Central Goods and Service Tax, Delhi South 2023 (8) TMI 995 - CESTAT NEW DELHI and after referring to the provisions of section 73 of the Finance Act, the Bench observed Suppression of facts has also been held through a series of judicial pronouncements to mean not mere omission but an act of suppression with an intent. In other words, without an intent being established, extended period of limitation cannot be invoked. The impugned order dated 31.01.2018 passed by the Commissioner (Appeals) is, accordingly, set aside - Appeal allowed.

Summary

Issues Involved:
1. Classification of services provided by the appellant.
2. Invocation of the extended period of limitation under section 73(1) of the Finance Act, 1994.

Summary:

1. Classification of Services Provided by the Appellant:
The appellant, engaged in non-scheduled operation of aircraft, believed their services were for 'air transportation of passengers' and thus did not pay service tax. However, a show cause notice dated 23.10.2013 proposed a demand of service tax under the category of 'supply of tangible goods'. The Additional Commissioner confirmed the demand, and the Commissioner (Appeals) dismissed the appellant's appeal.

2. Invocation of the Extended Period of Limitation:
The appellant contended that the extended period of limitation could not be invoked as there was no willful suppression of facts with intent to evade tax. The Additional Commissioner held that mere suppression was enough for invoking the extended period. The Commissioner (Appeals) confirmed this without examining the appellant's contention regarding the necessity of intent to evade payment of service tax.

The Tribunal referred to several decisions, including Pushpam Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay, where the Supreme Court held that suppression of facts must be deliberate and with an intent to evade payment of duty. This principle was reaffirmed in subsequent cases such as Anand Nishikawa Company Ltd. vs. Commissioner of Central Excise and Uniworth Textile Limited vs. Commissioner of Central Excise, Raipur. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication) and Mahanagar Telephone Nigam Ltd. vs. Union of India and others also emphasized that mere non-disclosure does not amount to willful suppression unless there is an intent to evade tax.

The Tribunal concluded that the mere non-disclosure of receipts in the service tax return does not imply an intent to evade payment of service tax. The impugned order dated 31.01.2018 by the Commissioner (Appeals) was set aside, and the appeal was allowed.