2024 (12) TMI 286 - AT - Service Tax

Invocation of extended period of limitation under section 73(1) of the Finance Act - suppression of facts - Appeal against order confirming demand of service tax - rent-a-cab service - renting of immovable property - income from taxation fees - 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. The proviso to section 73(1) of the Finance Act stipulates that where any service tax has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Chapter or the Rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax, the provisions of the said section shall have effect as if, for the word one year , the word five years has been substituted - There can be a difference of opinion between the department and an assessee. An assessee may genuinely believe that duty is not leviable, while the department may believe that duty is leviable. The assessee may, therefore, not pay duty in the self-assessment carried out by the assessee, but this would not mean that the assessee has wilfully suppressed facts. To invoke the extended period of limitation, atleast one of the five necessary elements must be established and their existence cannot be presumed merely because the assessee is operating under self assessment. In the present case, even though the show cause notice was issued to the appellant after the expiry of one year from the relevant date, the proviso to section 73(1) of the Finance Act has not been invoked. Though the appellant specifically denied that any facts had been suppressed, neither the Joint Commissioner or the Commissioner (Appeals) have dealt with this issue. It cannot be alleged by the department that facts were not in the knowledge of the department since two show cause notices dated 12/13.03.2013 and 26.03.2013 had been issued to the appellant. There is, therefore, no reason as to why the show cause notice should have been issued on 22.10.2014 beyond the normal period of limitation for the period from April 2012 to March 2013. It is, therefore, clearly a case where the facts were in the knowledge of the department and the department cannot allege that facts had been suppressed. This apart, service tax has been demanded on the basis of profit and loss account and balance sheet, which are public documents which the department could have ascertained. The issue involved in this appeal also relates to interpretation of law. The decisions referred to above have clearly held that in such circumstances there can be no suppression of facts with an intent to evade payment of service tax. The impugned order dated 21.08.2017 passed by the Commissioner (Appeals), therefore, deserves to be set aside on the sole ground that the extended period of limitation contemplated under the proviso to section 73 (1) of the Finance Act could not have been invoked in the facts and circumstances of the case nor it has been invoked - Appeal allowed.

Summary

Issues:
- Appeal against order confirming demand of service tax
- Invocation of extended period of limitation under section 73(1) of the Finance Act

Analysis:

1. The appeal was filed to challenge the order confirming the demand of service tax from April 2012 to March 2013. The appellant argued that the show cause notice was issued beyond the stipulated period under the proviso to section 73(1) of the Finance Act.

2. The show cause notice demanded service tax under "rent-a-cab service", "renting of immovable property", and income from tuition fees. The appellant contended that the notice was issued on 22.10.2014, which was beyond the prescribed time limit.

3. The appellant argued that the extended period of limitation should not have been invoked as the facts were known to the department. The appellant cited judgments to support the contention that the notice was issued beyond the statutory period.

4. The Joint Commissioner and the Commissioner (Appeals) did not address the appellant's argument regarding the invocation of the extended period of limitation.

5. Section 73(1) of the Finance Act allows the Central Excise Officer to serve a notice within one year from the relevant date for recovery of service tax not levied or paid. The relevant date is defined under section 73(6) of the Act.

6. The proviso to section 73(1) allows for an extended period of five years in cases of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade payment of service tax.

7. The appellant contended that there was no suppression of facts and that the department had the necessary information from public documents such as the profit and loss account and balance sheet.

8. Previous judgments were cited to support the argument that when information is available in public documents, there is no suppression of facts to evade payment of tax.

9. The Tribunal held that the extended period of limitation was not applicable in this case, as there was no intent to evade payment of service tax. The order confirming the demand was set aside, and the appeal was allowed.

10. The judgment was pronounced on 04.12.2024, granting relief to the appellant based on the non-invocation of the extended period of limitation under the Finance Act.