9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (8) TMI 95 - AT - Service TaxInvocation of Extended period of Limitation contemplated under the proviso to section 73 (1) of the Finance Act, 1994 - relevant date - suppression of facts or not - recovery of service tax not levied or paid or short levied or short paid or erroneously refunded - Services rendered to STPI units - Services rendered to US Library of Congress and US Commercial Services - Service Tax on the above services during 2006-07 and 2007-08 - Utilization of Credit in excess of 20% - Short-payment of Service Tax - Non-payment of Service Tax on services rendered to SEZ units during 03.03.2009 to 20.05.2009 - Interest on late payment of Service Tax. HELD THAT - It would be seen from a perusal of sub-section (1) of section 73 of the Finance Act that where any service tax has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the service tax which has not been levied or paid, requiring him to show cause why he should not pay amount specified in the notice. Section 73 (1) of the Finance Act does not mention that suppression of facts has to be wilful‟ since wilful‟ precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression wilful before suppression of facts under section 73(1) of the Finance Act, suppression of facts has still to be willful and with an intent to evade payment of service tax. The Supreme Court and the Delhi High Court have held that suppression of facts has to be wilful‟ and there should also be an intent to evade payment of service tax. 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 is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when suppression‟ is shown to be wilful with intent to evade the payment of service tax. The show cause notice, therefore, presumes that there was intent to evade payment of service tax merely because the appellant had not disclosed the correct service tax liability in the service tax returns. The show cause notice does not disclose why the appellant had an intent to evade payment of service tax. Merely because the correct service tax liability had not been disclosed, it cannot be presumed that there was an intent to evade payment of service tax. The burden of proving that the appellant had suppressed facts with an intent to evade payment of service tax was clearly upon the department. It was necessary for the department to illustrate any positive act on the part of the appellant. According to the appellant, it was under a bonafide belief that it was not liable to pay service tax and the matter also involved interpretation of various provisions of the Finance Act as well as the services rendered to the SEZ Units and to the STPI Units. The appellant had been filing the service tax returns and an audit of the records of the appellant had also been conducted in 2010 for the period 2006-07 to 2009-10. The show cause notice was, however, issued on 19.10.2011 after a substantial lapse of time. In this connection, it would be pertinent to refer to the judgment of the Supreme Court in Commissioner of C. Ex. Customs vs. Reliance Industries Ltd. 2023 (7) TMI 196 - SUPREME COURT . The Supreme Court held that if an assessee bonafide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be malafide. If a dispute relates to interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bonafide manner. There is no suppression of material facts from the department, much less with an intent to evade payment of service tax. The extended period of limitation contemplated under the proviso to section 73(1) Finance Act, therefore, could not have been invoked in the facts and circumstances of the case. It will, therefore, not be necessary to examine the contention raised by learned counsel for the appellant that the order should be set aside as the time limit specified in section 73(4B) of the Finance Act had not been adhered to. The impugned order 30.12.2016 passed by the Commissioner, therefore, cannot be sustained and is set aside - Appeal allowed.
Issues Involved:
1. Services rendered to STPI units. 2. Services rendered to US Library of Congress and US Commercial Services. 3. Service Tax on the above services during 2006-07 and 2007-08. 4. Utilization of Credit in excess of 20%. 5. Short-payment of Service Tax. 6. Non-payment of Service Tax on services rendered to SEZ units during 03.03.2009 to 20.05.2009. 7. Interest on late payment of Service Tax. 8. Invocation of the extended period of limitation under section 73(1) of the Finance Act, 1994. Issue-wise Detailed Analysis: I. Services rendered to STPI units: (a) The appellant rendered services to STPI Units (100% EOU) during the relevant period, which are not exempted from service tax under Notification dated 31.03.2004. (b) The services rendered by the appellant were in nature of lease circuit services, telecommunication services, internet telecommunication services, online information services, on which the appellant is liable to pay service tax. (c) For the period from 2008-09 to 2010-11, the appellant is liable to pay service tax of Rs. 1,03,66,861/-. II. Services rendered to US Library of Congress and US Commercial Services: (a) The appellant rendered certain services to US Library of Congress and US Commercial Services, which are not exempt under Notification dated 02.08.2002. (b) For the period from 2008-09 to 2010-11, the appellant is liable to pay service tax of Rs. 2,25,573/-. III. Service Tax on the above services during 2006-07 and 2007-08: (a) On the above services rendered to STPI Units, US Library of Congress and US Commercial Services, the appellant is liable to pay service tax of Rs. 1,93,12,582/- for the period 2006-07 and 2007-08 also. IV. Utilization of Credit in excess of 20%: (a) In its ST-3 returns, the appellant claimed and utilized CENVAT Credit on common input services for the period 2006-07 to 2007-08. There was a restriction on utilization of credit in excess of 20%. (b) During September, 2006 to March, 2008, the appellant utilized credit in excess of 20%, on which it is liable to pay interest of Rs. 5,16,956/-. V. Short-payment of Service Tax: (a) For the period April-June, 2006, the appellant short-paid service tax of Rs. 13,85,051/-, as reflected in ST-3 returns. VI. Non-payment of Service Tax on services rendered to SEZ units during 03.03.2009 to 20.05.2009: (a) The appellant rendered services to a SEZ Unit during 03.03.2009 to 20.05.2009 for Rs. 1,07,879/-, on which it is liable to pay service tax of Rs. 11,112/-. VII. Interest on late payment of Service Tax: (a) Service tax liability for the months of September, 2007 and March, 2008 was deposited by the appellant after the due date. Thus, the appellant is liable to pay interest of Rs. 5,231/-. VIII. Invocation of the extended period of limitation under section 73(1) of the Finance Act, 1994: The show cause notice invoked the extended period of limitation under the proviso to section 73(1) of the Finance Act, alleging that the appellant had intentionally and willfully suppressed facts to evade payment of service tax. The Commissioner upheld this invocation, stating that the appellant had suppressed all material facts from the department. Detailed Analysis: 1. Invocation of the Extended Period of Limitation: The Tribunal first examined whether the extended period of limitation could be invoked. Section 73(1) of the Finance Act allows a notice to be served within one year from the relevant date for recovery of service tax not levied or paid. However, the proviso extends this period to five years in cases involving fraud, collusion, wilful misstatement, suppression of facts, or contravention of provisions with intent to evade payment of service tax. The Tribunal cited several Supreme Court judgments (Pushpam Pharmaceuticals, Anand Nishikawa Company Ltd., Uniworth Textile Limited, Continental Foundation Joint Venture Holding) and the Delhi High Court judgment in Bharat Hotels Limited, which established that suppression of facts must be "wilful" and with an intent to evade payment of service tax. The Tribunal found that the show cause notice merely presumed intent to evade payment of service tax without providing specific reasons or evidence. The Commissioner also failed to provide any reason for the alleged intent to evade payment. The burden of proving wilful suppression with intent to evade payment was on the department, which it failed to discharge. 2. Self-Assessment Scheme: The Tribunal noted that under the self-assessment scheme, it is the responsibility of the assessee to determine the liability correctly. However, the department can always call upon an assessee and seek information. The Tribunal referred to the judgment in M/s. Raydean Industries, which emphasized that even in self-assessment, the department has a duty to scrutinize the correctness of the duty assessed by the assessee. 3. Bona Fide Belief: The Tribunal referred to the Supreme Court judgment in Commissioner of C. Ex. & Customs vs. Reliance Industries Ltd., which held that if an assessee bona fide believes it is correctly discharging duty, merely being found wrong later does not render the belief malafide. Disputes related to interpretation of legal provisions do not justify invoking the extended period of limitation. 4. Demand for Period Within Limitation: The Tribunal cited the Kolkata High Court judgment in Infinity Infotech Parks, which held that if the extended period of limitation is not invocable, the demand for the period within limitation cannot be confirmed. Conclusion: The Tribunal concluded that the extended period of limitation could not be invoked as there was no wilful suppression of material facts with intent to evade payment of service tax. Consequently, the demand for the period within limitation also could not be confirmed. The impugned order dated 30.12.2016 passed by the Commissioner was set aside, and the appeal was allowed.
|
