2022 (1) TMI 762 - HC - Service Tax

Security service - Non-payment of service tax inspite of collection of service Tax from its clients - suppression of facts - extended period of limitation - HELD THAT - It is beyond comprehension as to what prevented the department to investigate in the year 2004 itself in contacting the end users on the service base so as to verify the authenticity of these invoice copies. It is trite that the deficiencies in the investigation or incorrect demand in the first show cause notice cannot be made good in the second show cause notice and subsequent show cause notice alleging suppression of facts again is not reasonable since repeated issuance of notices would result in revisiting the concluded proceedings and reopening of the proceedings at any point of time. The fact finding authority having taken cognizance of the facts has reached at a conclusion that there was no suppression by the respondents to invoke the extended period of limitation which being purely based on the factual aspects of the matter there are no reasons in interfere with the same. The substantial questions of law are answered in favour of the assessee and against the Revenue - appeal dismissed.

Summary

Issues:
1. Whether the CESTAT correctly considered the facts regarding the non-payment of Service Tax by the respondent for security services?
2. Whether the CESTAT erred in not acknowledging the differences in facts between the earlier notice and the subsequent order, indicating suppression by the respondent?
3. Whether the Revenue can invoke the extended period of limitation in the given circumstances?

Analysis:

Issue 1:
The appeal challenges the CESTAT's decision where the respondent was found to have collected Service Tax but not paid it for security services. The Revenue argues that the CESTAT failed to consider this crucial fact, revealed during an inspection, and wrongly applied the Nizam Sugar Factory case law. The CESTAT's decision was based on the belief that the same set of facts was known to the authorities earlier, thus not constituting suppression by the respondent.

Issue 2:
The dispute also revolves around the differences in facts between the earlier notice and the subsequent order. The respondent had been issued a show cause notice in 2004, followed by an order in 2004, which was challenged. The CESTAT set aside penalties and remanded the case, emphasizing that the extended period of limitation should not have been invoked based on the known facts from the previous proceedings.

Issue 3:
Regarding the invocation of the extended period of limitation, the Revenue contended that the CESTAT overlooked the necessity to investigate further in 2004 itself. The Court highlighted that repeated issuance of notices based on the same facts would lead to revisiting concluded proceedings, emphasizing the importance of correct investigations and demands. The judgment referred to legal precedents and departmental clarifications to support the decision.

In conclusion, the High Court dismissed the appeal, upholding the CESTAT's decision. The Court found no suppression by the respondent to warrant the extended period of limitation. The judgment emphasized the importance of factual accuracy, legal precedents, and the binding nature of established case law.