2024 (7) TMI 1316 - AT - Service Tax

Suppression of facts or not - invocation of extended period of limitation - Non-payment of due amount of service tax on manpower recruitment and supply service - gross receipts indicated by the appellant in their ST-3 returns were substantially lower that the amounts shown in 26AS statement - appellant had collected the service tax amount from their clients and did not deposit the same in the Government exchequer - penalty. HELD THAT - As per the legal provisions prior to 1.7.2012, it is noted that the liability to pay the entire service tax was on the service provider. However, vide notification No. 30/2012 dated 20.06.2012, the service tax liability was shared (25%/75%) in case if any individual or HUF or partnership firm is providing supply of manpower service for any purpose to business entity registered as a body corporate. The adjudicating authority has held that the Form 26 AS/Balance Sheets of the appellant, as obtained from the Income Tax department indicate that during the period 2011-12 to 2014-2015, the appellant was engaged in providing the said taxable services. There is no contrary evidence that has been submitted by the appellant to hold otherwise - the Department has relied on the 26AS statement which is a statement that provides details of any amount deducted as Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) from various sources of income of a taxpayer. This statement gives a consolidated record of every tax-related information associated with a PAN. Therefore, the veracity of the statement cannot be doubted. It is observed that it has been mostly contended by the ld. counsel to the appellant that the demand for the extended period is not sustainable as there was no intent to evade tax. At the outset, the contention of the ld. counsel that the show cause notice refers to suppression and not mis-statement of facts cannot be accepted - the appellant was aware of his tax liability and chose not to pay his tax correctly. In the instant case, the appellant did not cooperate with the investigations, failed to submit any documents to substantiate his claim and did not disclose the actual value of taxable services provided by him in the ST-3 returns filed by him. This clearly establishes his intent to evade his liability to pay service tax. Thereafter to appeal to this forum alleging that the demand was time barred, and the finding of suppression of facts was erroneous cannot be accepted. Extended period of limitation - HELD THAT - It has been held in the impugned order that as per the chronology of events, during the period in question, the appellant had failed to discharge his liability correctly, as well as suppressed the value of the taxable services realized by them in the ST-3 returns filed by them - the Apex Court in the case of M/S. USHA RECTIFIER CORPN. (I) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE 2011 (1) TMI 12 - SUPREME COURT held that extended period is invokable for notices where the information has been taken by the Department from the Balance Sheet - there are no hesitation in holding that the extended period was rightly upheld by the adjudicating authority. Penalties - HELD THAT - The penalties imposed under Section 77(1)(c)(ii), 77(1)(c)(iii) and Section 78 of the Act upheld. There are no infirmity in the impugned order - appeal dismissed.

Issues Involved:
1. Suppression of facts and misstatement of taxable value.
2. Invocation of the extended period of limitation.
3. Imposition of penalties under Sections 77 and 78 of the Finance Act, 1994.

Issue 1: Suppression of Facts and Misstatement of Taxable Value

The appellant, engaged in providing Manpower Recruitment and Supply Agency Services, was found to have discrepancies between the gross receipts indicated in their ST-3 returns and the amounts shown in the 26AS statement. The department alleged that the appellant had not paid the due amount of service tax and had collected but not deposited the service tax amount from their clients. The Commissioner confirmed the demand of Rs. 2,21,40,531/- along with interest and penalties.

The appellant contended that the Show Cause Notice (SCN) only alleged suppression of facts and not other elements like fraud or collusion required under proviso to Section 73(1) of the Finance Act, 1994. They argued that the adjudicating authority's finding of suppression to evade payment of service tax was erroneous and amounted to making a new case at the adjudication stage.

The tribunal noted that the appellant did not provide any contrary evidence and failed to produce documents or respond to summons, thus confirming the suppression of facts. The tribunal emphasized that the appellant's failure to declare the correct value in ST-3 returns and the immediate payment of Rs. 45 lakh upon investigation indicated a deliberate intent to evade tax.

Issue 2: Invocation of the Extended Period of Limitation

The appellant argued that the demand for the extended period was not sustainable as no intent to evade tax was established. They cited the normal period of limitation under Section 73 of the Finance Act, 1994, and argued that demands for periods that had become time-barred under the old provision could not be revived by the new provision.

The tribunal rejected this contention, noting that the appellant did not cooperate with investigations and failed to submit any documents to substantiate their claims. The tribunal upheld the use of the extended period, referencing the Apex Court's rulings that suppression includes not declaring what should be declared, thus justifying the extended period for recovery of tax.

Issue 3: Imposition of Penalties under Sections 77 and 78 of the Finance Act, 1994

The appellant contested the imposition of penalties under Sections 77(1)(c)(iii) and 78. They argued that the penalty under Section 77(1)(c)(iii) was erroneous as the summons were for producing documents already submitted, and the penalty under Section 78 was not warranted as there was no suppression of facts.

The tribunal upheld the penalties, noting that the appellant's non-compliance with summons and failure to disclose the correct taxable value in ST-3 returns indicated a clear intent to evade tax. The tribunal referenced the appellant's immediate payment of Rs. 45 lakh upon investigation as evidence of their awareness and deliberate evasion of tax liabilities.

Conclusion:

The tribunal found no merit in the appellant's arguments and upheld the impugned order, confirming the demand of Rs. 2,21,40,531/- along with interest and penalties under Sections 77 and 78 of the Finance Act, 1994. The appeal was dismissed.

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