2025 (1) TMI 1321 - AT - Service Tax

Levy of service tax - Erection Commissioning and Installation service - invocation of extended period of limitation - suppression of facts or not - HELD THAT - Though the appellant contends that it had made submissions verbally/orally in response to the letter however it is not proposed to accept the same for want of any supporting evidence. But in any case the fact remains that the above intimation was followed by reminders of various dates and hence there is no dispute as to the starting point which is 21.02.2007. The Show Cause Notice issued on 22.10.2012 is undoubtedly beyond the normal period rather extending the larger period of limitation and hence it was incumbent on the Revenue to prove that the appellant had suppressed facts with an intent to evade payment of tax. From a reading of SCN the allegation against the appellant is that there was no voluntary compliance on its part despite several reminders and that the non-payment of service tax would have gone un-noticed but for the detection at the time of conducting audit by the departmental officers. Conclusion - The allegations ipso facto would not suffice the invoking of larger period of limitation and nor would the same in anyway amounts to suppression or fraud or even misstatement and hence the demand of service tax by invoking the extended period of limitation itself stands disproved. Appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The Tribunal considered two primary issues:

(i) Whether the demand against the appellant for the alleged service of Erection, Commissioning, and Installation (ECIS) is justified.

(ii) Whether the Revenue has satisfied the requirements for invoking the extended period of limitation.

ISSUE-WISE DETAILED ANALYSIS

Issue (i): Justification of Demand for ECIS

- Relevant Legal Framework and Precedents: The appellant's work involved electrification as part of a larger construction project, which they argued falls under "Commercial or Industrial Construction Service" (CICS) rather than ECIS. The appellant referenced Circular No. 80/10/2004 - ST, which exempts certain construction services related to government buildings.

- Court's Interpretation and Reasoning: The Tribunal noted that the appellant did not dispute the execution of electrification work but contended it was a sub-work of a larger construction project. The Tribunal examined the applicability of the Circular, which exempts certain government-related construction activities from service tax.

- Key Evidence and Findings: The Tribunal found that the appellant's work was indeed part of a government construction project, which under the cited circular, could be exempt from service tax.

- Application of Law to Facts: The Tribunal applied the exemption provided by the Circular to the facts, determining that the appellant's work did not fall under ECIS but was part of a broader exempt construction service.

- Treatment of Competing Arguments: The Tribunal considered the Revenue's argument that the appellant failed to voluntarily comply with tax obligations. However, it found that the appellant's work was exempt under the existing legal framework.

- Conclusions: The Tribunal concluded that the demand for service tax under ECIS was not justified, as the appellant's work fell under an exempt category.

Issue (ii): Invocation of Extended Period of Limitation

- Relevant Legal Framework and Precedents: The extended period of limitation can be invoked under the condition of suppression of facts, fraud, or willful misstatement with intent to evade tax.

- Court's Interpretation and Reasoning: The Tribunal examined whether the appellant's actions constituted suppression or fraud. The Tribunal highlighted the requirement for the Revenue to prove intent to evade tax to justify the extended period.

- Key Evidence and Findings: The Tribunal noted that the first communication of tax liability was on 21.02.2007, and the Show Cause Notice was issued on 22.10.2012, beyond the normal limitation period. The Tribunal found no evidence of suppression or intent to evade tax by the appellant.

- Application of Law to Facts: The Tribunal applied the legal standards for invoking the extended period and found that the Revenue had not met the burden of proof required to justify its use.

- Treatment of Competing Arguments: The Tribunal considered the Revenue's argument of non-compliance and lack of voluntary payment. However, it found these insufficient to prove suppression or fraudulent intent.

- Conclusions: The Tribunal concluded that the invocation of the extended period of limitation was not justified, as the necessary conditions were not met.

SIGNIFICANT HOLDINGS

- The Tribunal held that the demand for service tax under ECIS was unjustified due to the exemption applicable under Circular No. 80/10/2004 - ST for government construction projects.

- The Tribunal determined that the extended period of limitation was improperly invoked, as the Revenue failed to demonstrate suppression or intent to evade tax.

- The Tribunal set aside the demand and the impugned order on the grounds of limitation, allowing the appeal with consequential benefits as per law.

The Tribunal's decision underscores the importance of adhering to statutory exemptions and the burden of proof required to invoke extended limitation periods in tax matters.