2024 (11) TMI 56 - AT - Service Tax

Service Tax demand and penalties thereon - Invoking extended period of limitation for issuing the show cause notice - HELD THAT - It is settled law that subsequent show cause notice could not have been issued by invoking extended period of limitation. Even for the previous period where the show cause notice has been issued invoking extended period of limitation and the demands were confirmed holding that extended period of limitation would be applicable. As decided in A.N. Kapoor (Janitors) Pvt. Ltd. 2021 (2) TMI 942 - CESTAT ALLAHABAD under similar conditions Department was aware of the facts when the first show cause notice was issued and, therefore, the extended period of limitation could not have been invoked in the third show cause notice. Thus we find that demand is barred by limitation. We have also find that admittedly three returns were filed, the delay for which late fee has been imposed as per the impugned order. The late fee for such delay in filing cannot be disputed. In view of the above levy of late filing fees in case where there is delay in filing the returns cannot be faulted with.

Issues Involved:

1. Confirmation of Service Tax demand and associated penalties.
2. Invocation of the extended period of limitation for issuing the show cause notice.
3. Imposition of late fees for delayed filing of returns.

Detailed Analysis:

1. Confirmation of Service Tax Demand and Associated Penalties:

The Tribunal reviewed the Order-in-Appeal which confirmed the demand for Service Tax amounting to Rs. 53,43,481 for the fiscal years 2015-16 to 2017-18, along with a smaller amount of Rs. 14,065 on legal expenses for the same period. The order also imposed penalties under Section 78 of the Finance Act, 1994, and late fees under Section 70 of the Act. The Tribunal noted that the original authority had upheld these demands based on the alleged willful suppression of taxable value by the noticee, which was not disclosed in the service tax returns. This suppression was identified through third-party data and subsequent investigation, leading to the conclusion that the noticee had deliberately evaded payment of service tax.

2. Invocation of the Extended Period of Limitation:

A significant issue was the invocation of the extended period of limitation under Section 73(1) of the Finance Act, 1994. The Tribunal observed that the original authority had relied on the extended period due to suppression of facts by the noticee. However, the Tribunal found that the show cause notice issued on 17.12.2020 for the period 2015-16 to 2017-18 was time-barred. The Tribunal referred to the CBIC Notification dated 30.09.2020, which was issued in response to the COVID-19 pandemic, but concluded that the notification could not revive a demand that was already barred by limitation. The Tribunal emphasized that subsequent show cause notices could not invoke the extended period of limitation if the facts were already known to the department, as established in previous judgments, including the Supreme Court decision in Nizam Sugar Factory v. Collector of Central Excise. Consequently, the Tribunal set aside the demand on the ground of limitation.

3. Imposition of Late Fees for Delayed Filing of Returns:

The Tribunal upheld the imposition of late fees for delayed filing of service tax returns. It acknowledged that the appellant had filed the returns with a delay of about 65 days, which was not contested. The imposition of late fees was deemed a legal obligation, independent of any tax evasion considerations. The Tribunal reiterated its earlier stance that the late fees were justified as per statutory requirements.

Conclusion:

The appeal was partly allowed. The Tribunal set aside the service tax demand and associated penalties due to the improper invocation of the extended period of limitation but upheld the imposition of late fees for the delayed filing of returns. The decision was dictated and pronounced in open court.

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