2023 (12) TMI 437 - AT - Service Tax

Advance payment received in terms of the Notification No. 36/2010 ST dated 28.06.2010 to avail the benefit of the exemption - Date of receipt of consideration of services in case where cheques were received on or before 30.06.2010 but were honoured on or after 01.07.2010 - suppression of facts or not - extended period of limitation - HELD THAT - It is not a case of suppression or mis- statement of facts as no specific allegations have been made in the show cause notice. She is right in saying that the issue involved interpretation of the notification so as to be entitle to claim the exemption therein. There can always be two opinion as to whether it is the date of the cheque on which it is being presented or the date when the said cheque is encashed which has to be taken into account. The appellant was under a bonafide belief that since they had received the advance payment by way of cheque prior to the appointed date, they were entitle to the exemption under the notification and therefore did not pay the service tax. In such circumstances, the invocation of the extended period of limitation has been held in series of decisions to be untenable and therefore the demand shall not be maintainable. In the decision of this Tribunal in M/S. GANNON DUNKERLEY CO. LTD. VERSUS COMMISSIONER (ADJUDICATION) OF SERVICE TAX, NEW DELHI 2020 (12) TMI 1096 - CESTAT NEW DELHI , it has been observed that where the appellant is regularly filing the returns, the department cannot take a stand that it is only during the audit that it can examine the factual position and therefore it cannot be urged by the department that if the officers of the audit team had not conducted the audit, non-payment of service tax would not have been unearthed and therefore the extended period of limitation could not have been invoked as it was not a case of suppression of facts by the appellant. In the present case also, it is the submission of the appellant that they are duly filing ST-3 returns, which has not been disputed by the learned authorised representative for the revenue and therefore in the light of the principles laid down by the Principal Bench, the extended period of limitation cannot be invoked by the department. The penalty and the interest shall also not be levied - Appeal allowed.

Summary

Issues:
1. Determination of the date of receipt of consideration of services in case of cheques received before 30.06.2010 but honoured on or after 01.07.2010 for availing exemption.
2. Invocability of the extended period of limitation under Section 73 of the Finance Act, 1994.

Issue 1:
The appellant, engaged in various construction and renting services, was found to have not paid service tax on receipts up to 30.06.2010, received via cheques honored on or after 01.07.2010. The Adjudicating Authority held that advance payment refers to consideration received for taxable services, deposited in the party's account by the bank. The Appellate Authority affirmed this decision. The Tribunal upheld that in the case of cheque payments, the date of honoring the cheque should be considered as the date of receipt of advance payment. As the appellant received the amount post 01.07.2010, they were not entitled to the exemption.

Issue 2:
Regarding the extended period of limitation under Section 73, a show cause notice was issued for the period October 2009 to September 2011, beyond one and a half years from the demand period. The appellant argued that the demand for the period before October 2011 was time-barred due to no suppression or fraud. They believed they were exempt under the notification due to cheques dated pre-1.7.2010. The Tribunal agreed that as there was no suppression of facts and the issue was about interpretation of the notification, the extended limitation period was not applicable. Citing a previous decision, it was noted that if returns were regularly filed, the extended period of limitation cannot be invoked. Thus, the demand, penalty, and interest were not upheld, and the appeal was allowed.