2024 (11) TMI 1281 - AT - Service Tax

Service tax on amounts received by the Local Cable Operators (LCOs) - invocation of extended period of limitation - proof of suppression of material on the part of the appellant HELD THAT - Department has not been able to establish the suppression of material on the part of the appellant who is only a small service provider. Further, the appellant has filed all the relevant documents and has not concealed any information from the department so as to invoke the extended period of limitation. It has been consistently held by the Courts in various decisions that in order to invoke extended period, there must be some positive act on the part of the party to establish either wilful mis-declaration or wilful suppression - mis-statement or suppression of facts must be wilful and deliberate. As decided in Chemphar Drugs Liniments 1989 (2) TMI 116 - SUPREME COURT that Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability . Thus, the invocation of extended period of limitation is not justified in the present case and therefore hold that the entire demand is barred by limitation. We are not going into the merits of the controversy as held in the case of Commissioner of Customs vs. B.V. Jewels 2004 (9) TMI 104 - SUPREME COURT

Summary

Issues:
Appeal against order of Commissioner (Appeals) upholding Order-in-Original; Service tax demand and Cenvat credit; Allegation of suppression of material facts by appellant; Invocation of extended period of limitation.

Analysis:
The appeal was directed against the order of the Commissioner (Appeals) upholding the Order-in-Original, which confirmed a service tax demand and inadmissible Cenvat credit against the appellant. The appellant, a small service provider, argued that the demand was barred by limitation as they had not suppressed any material facts and had regularly filed returns and provided necessary documents to the department. The period in question was April 2014 to September 2014, and the show cause notice was issued in May 2016. The appellant contended that the department's allegation of suppression and fraud was not sustainable. The appellant cited precedents to support their argument, emphasizing that wilful mis-declaration or suppression must be proven to invoke the extended period of limitation.

The Authorized Representative for the Revenue maintained that the appellant had not provided requested information despite notices, justifying the invocation of the extended period. However, upon review, the Tribunal found that the department failed to establish any suppression of material facts by the appellant. The Tribunal noted that the appellant had cooperated with the department, providing all relevant documents and information. Citing legal precedents, the Tribunal emphasized that for the extended period to apply, there must be a positive act of wilful mis-declaration or suppression. Referring to a Supreme Court decision, the Tribunal highlighted the requirement for something positive beyond mere inaction or failure to establish liability.

Considering the legal principles and the specifics of the case, the Tribunal concluded that the invocation of the extended period of limitation was unjustified. Consequently, the Tribunal held that the entire demand was barred by limitation. The Tribunal, following the decision in Commissioner of Customs vs. B.V. Jewels, decided not to delve into the merits of the controversy, setting aside the impugned order and allowing the appeal solely on the grounds of limitation. The judgment was pronounced in favor of the appellant based on the limitation issue, without addressing the merits of the case.