2023 (12) TMI 1211 - AT - Service Tax

Extended period of limitation - suppression of facts or not - mining service or not - service of blasting the rocks/boulders from the quarries, loading them into trucks and transporting them to the site of the crusher - HELD THAT - As per section 73 of the Act, demand of service tax not paid or short paid can be raised only within the normal period of limitation. However, extended period of limitation can be invoked, if the non-payment or short payment of service tax is on account of fraud or collusion or willful statement or suppression of facts or violation of the provisions of the Act or Rules with an intent to evade payment of service tax. Evidently, fraud, collusion and willful statement have an in-built element of mens-rea. Without the intent being established, these cannot be alleged. As far as the suppression of facts is concerned, it has been held in a series of judicial pronouncements that since the words suppression is used along with words, such as, fraud, collusion and willful statement mere omission cannot be called suppression and intent has to be established. It has now well settled position of law. The two SCNs merely state that the appellant had not disclosed the value of the taxable services which it had rendered correctly in its ST-3 returns and, therefore, presume that the appellant had an intention to evade payment of service tax. There is not an iota of evidence in either of the SCN of this intent - Both the SCNs further state that had the audit not conducted scrutiny of the records, the short paying the service tax would not have come to notice. It is a matter of fact that all the details were available in the records of the appellant. The appellant was required to furnish returns under section 70 with the Superintendent of Central Excise which it did. It is for the Superintendent to scrutinize the returns and ascertain if the service tax had been paid correctly or not. If the assessee either does not make the returns under section 70 or having made a return, fails to assess the tax in accordance with the provisions of Chapter or Rules made thereunder, the Superintendent of Central Excise can make the best judgment assessment under section 72. The fact that the alleged short payment came to light only during audit does not prove the intent to evade payment of service tax by the appellant, but it only proves that the Range Superintendent had not done his job properly. For these reasons, it is found that the demand for the extended period of limitation cannot be sustained. It is evident that neither SCN has given any opportunity to the appellant to defend its case for the period after 01.07.2012. Both SCNs only proposed the demand under the head Mining Services for the period pre 01.07.2012 as well as period post 01.07.2012. As far as the demands for the period pre 01.07.2012 are concerned, it is already held that the extended period of limitation was wrongly invoked in both the SCNs and, therefore, demand cannot be sustained. The legal provisions pertaining to the post 01.07.2012 have not been invoked and the appellant was not put to notice although the Commissioner has, in the impugned order, confirmed the demand on the ground that the services rendered by the appellant were not covered by the negative list. It is a well settled legal principle that the adjudicating authority cannot travel beyond the SCN. Therefore, he could not have confirmed the demand under the provision after 01.07.2012. Under these circumstances, it is found that the demand in the impugned order is not sustainable and needs to be set aside. Consequently, the demand of interest and the penalties imposed also need to be set aside. Appeal allowed.

Issues Involved:
1. Classification of services provided by the appellant.
2. Applicability of service tax on the services rendered.
3. Invocation of extended period of limitation.
4. Legality of penalties imposed.

Summary:

Issue 1: Classification of Services Provided by the Appellant
The appellant, M/s. Kalya Constructions Private Limited, provided services including blasting rocks, loading them into trucks, and transporting them to the site of the crusher. The Revenue classified these services as "mining services" chargeable to service tax under section 65 (105) (zzzy) of the Finance Act, 1994. The appellant contended that the services were not mining services but were incidental to the manufacture of boulders, which is exempt from service tax.

Issue 2: Applicability of Service Tax on the Services Rendered
The appellant argued that the activities amounted to manufacture under section 2(f) of the Central Excise Act, 1944, and thus, no service tax could be levied. The Revenue countered, citing the Supreme Court's decision in Aman Marble Industries Pvt. Ltd. vs. Collector of Central Excise, Jaipur, which held that mere excavation and size reduction of stones do not constitute manufacturing. The Tribunal upheld the Revenue's view that the services provided were indeed taxable as mining services.

Issue 3: Invocation of Extended Period of Limitation
The Tribunal examined whether the extended period of limitation under section 73 of the Finance Act, 1994, was rightly invoked. It was found that the SCNs merely stated that the appellant had not disclosed the taxable value correctly in its ST-3 returns, presuming an intent to evade tax without concrete evidence. The Tribunal held that the extended period could not be invoked as there was no intentional suppression of facts by the appellant, and any short payment detected during the audit was due to the failure of the Range Superintendent to scrutinize the returns properly.

Issue 4: Legality of Penalties Imposed
The Tribunal noted that the SCNs did not provide the appellant an opportunity to defend its case for the period after 01.07.2012, where the negative list regime was applicable. The Commissioner had confirmed the demand based on the services not being covered by the negative list, which was beyond the scope of the SCNs. Consequently, the demand, interest, and penalties imposed were found unsustainable and were set aside.

Conclusion:
The Tribunal allowed both appeals, setting aside the impugned order and providing consequential relief to the appellant. The invocation of the extended period of limitation was deemed incorrect, and the penalties imposed were also invalidated. The adjudicating authority was found to have overstepped by confirming demands beyond the SCNs' scope.

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