9911796707
TMI Blog2023 (8) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed the facts of availing inadmissible CENVAT credit on the inputs which were used for non-taxable services - according to the SCN, the appellant had deposited the disputed tax and interest but not the penalty but later contested the demand itself and by doing so, the appellant had intentionally and wilfully suppressed the facts of availing inadmissible CENVAT credit. Evidently, fraud, collusion, wilful misstatement and violation of Act or Rules with an intent all have the mens rea built into them and without the mens rea, they cannot be invoked. Suppression of facts has also been held through a series of judicial pronouncements to mean not mere omission but an act of suppression with an intent. In other words, without an intent being established, extended period of limitation cannot be invoked. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] the Supreme Court examined Section 11A of the Central Excise Act, 1944 which was worded similar to Section 73 of the Finance Act, 1994. The case of the Revenue is that the appellant had wilfully and deliberately suppressed the fact that it had availed ineligible CENVAT credit on input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suppression of facts or violation of the provisions of Act or Rules with an intent - Intentional and wilful suppression of facts cannot be presumed because (a) the appellant was operating under self-assessment or (b) because the appellant did not agree with the audit and claimed that CENVAT credit was admissible; or (c) because the appellant did not seek any clarification from the Revenue; or (d) because the officer did not conduct a detailed scrutiny of the Returns and the availment of CENVAT credit which is alleged to be inadmissible and was discovered only during audit. It is found in favour of the appellant on the question of limitation. As the entire demand except what has been conceded by the appellant falls beyond the value period of limitation it is not necessary to examine the merits of the case - the impugned order is set aside except to the extent of denial of CENVAT credit or Rs. 1,45, 724 on the architectural services during the period 2011-12 and interest thereon and order of its recovery. Appeal partly allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... of the remand proceeding initiated as directed by the Hon'ble CESTAT, Delhi, vide its Final Order No. 50457-50458/2019 dated 28.03.2019, in above terms. 2. This is the second round of litigation. Initially, the matter was decided by the Commissioner by Order dated 10.4.2015 and on appeal, this Tribunal, by Final Order dated 28.3.2019, remanded the matter to the Commissioner to examine the matter both on merits and on limitation. Following this order of the Tribunal the impugned order was passed. 3. According to the learned counsel for the appellant, the appellant had built two high quality school buildings and provided high quality school education from these and this service of school education is an exempted service. The appellant also provided two other services, viz., franchisee service and renting of immovable property service on which it paid service tax. 4. The appellant availed CENVAT credit on various input services which had gone into the construction of the school building and used it to pay service tax on the franchisee service and renting of immovable property service. According to the Revenue, this credit is ineligible because the input services were used in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intent to evade payment of service tax were present in the case. He submits that if the extended period of limitation is not invoked only a small portion of the demand pertaining to architectural services for the period 2011-12 remains which, they concede, was not available as input service as this service was excluded from the definition of input services through an amendment. He submits the break-up of the demand as follows. CENVAT Credit Availed for 2008-2009 2009-2010 2010-2011 2011-2012 Total Submission on Merits Upfront Fees paid to bank 6,11,820 2,98,700 9,10,520 Full Credit Eligible under Rule 6(5) of CCR Processing Fees paid to bank 2,24,329 2,24,329 Service Charges for funds and loans 1,66,182 1,66,182 Professional fees for arranging funds and loans 10,86,650 16,60,800 8,04,430 34,97,880 Fees for development of Franchisee 25,700 (dropped) Exclusively for taxable service tax Architect Fees 1,38,020 1,45,724 (Admitted as input service upto 31.03.2011) 2,83,744 Input Service upto 31.03.2011 and Full Credit Eligible under Rule 6(5) of CCR Tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tipulated time was not discharged. There is no evidence to the effect that the appellant had sought any clarification from the Department in this regard. Accordingly, the appellant wilfully and deliberately suppressed the facts from the Department so as to avoid its liability. Learned authorised representative has also submitted that but for the audit the irregular availment of CENVAT Credit would not have been noticed. 10. Thus, according to the Revenue, extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 was correctly invoked for the following reasons. (a) The appellant had, during the audit, deposited the allegedly short paid service tax but later disputed it which shows its intention to evade payment of service tax. (b) The appellant was operating in a regime of self-assessment in which it was required to self-assess service tax and pay it and file returns correctly. Since the appellant had not assessed the service tax correctly by availing and utilising ineligible CENVAT credit, it is a violation of the provisions of the Act and Rules and it amounts to intentional and wilful suppression of the fact of availing inadmissible CENVAT cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression." 14. In this appeal, the case of the Revenue is that the appellant had wilfully and deliberately suppressed the fact that it had availed ineligible CENVAT credit on input services. The position of the appellant was at the time of self-assessment and, during the adjudication proceedings and is before us that it is entitled to the CENVAT credit. Thus, we find that it is a case of difference of opinion between the appellant and the Revenue. The appellant held a different view about the eligibility of CENVAT credit than the Revenue. Naturally, the appellant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich it is not required to disclose. Form ST-3 in which the appellant is required to file the returns does not require details of the invoices or inputs or input services on which it availed CENVAT credit and the appellant is not required to and hence did not provide the details of the CENVAT Credit taken. It also needs to be pointed out that the Returns are filed online and therefore, it is also not possible to provide any details which are not part of the returns. If the format of ST-3 Returns is deficient in design and does not seek the details which the assessing officers may require to scrutinise them, the appellant cannot be faulted because as an assessee, the appellant neither makes the Rules nor designs the format of the Returns. So long as the assessee files the returns in the formats honestly as per its self assessment, its obligation is discharged. 18. Another ground for invoking extended period of limitation is that the appellant had not sought any clarification from the department. We find that there is neither any provision in the law nor any obligation on the assessee to seek any clarification. It was held by the High Court of Delhi in paragraph 32 of Mahanagar Telep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such assessment." 20. Thus, 'the central excise officer' has an obligation to make his best judgment if either the assessee fails to furnish the return or, having filed the return, fails to assess tax in accordance with the Act and Rules. To determine if the assessee had failed to correctly assess the service tax, the central excise officer has to scrutinize the returns. Thus, although all assessees self-assess tax, the responsibility of taking action if they do not assess and pay the tax correctly squarely rests on the central excise officer, i.e., the officer with whom the Returns are filed. For this purpose, the officer may require the assessee to produce accounts, documents and other evidence he may deem necessary. Thus, in the scheme of the Finance Act, 1994, the officer has been given wide powers to call for information and has been entrusted the responsibility of making the correct assessment as per his best judgment. If the officer fails to scrutinise the returns and make the best judgment assessment and some tax escapes assessment which is discovered after the normal period of limitation is over, the responsibility for such loss of Revenue rests squarely on the shoulder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process and suggest qualitative improvements to enhance revenue efficiency and ensure taxpayer satisfaction. The business re-engineering exercise conducted for returns' scrutiny revealed the need to distinguish between preliminary scrutiny and detailed scrutiny in a two-tier scrutiny process. 1.2B It was decided that a preliminary scrutiny would be conducted on all returns. This could even be undertaken online. Detailed scrutiny, on the other hand, would cover select returns, identified on the basis of risk parameters, drawn from the information furnished by taxpayers in the statutory returns (Service Tax returns or ST-3 in this case). CBEC felt that facilitating preliminary scrutiny online would enhance efficiency and release manpower for detailed manual scrutiny, which could then become the core function of the Range/Group. 2) A detailed scrutiny programme also serves a 'workload development' function by initiating referrals for audit/anti-evasion. 1.2.2 Authority and Ownership 1.2.2A The authority to conduct scrutiny of returns for verifying the assessment done by the assessee is provided in Rule 5A of the Service Tax Rules, 1994. This rule, interalia, authorizes t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le for such loss of revenue. Such a loss of Revenue is the risk taken by the Board as a matter of policy. d) Extended period of limitation cannot be invoked unless there is evidence of fraud or collusion or wilful misstatement or suppression of facts or violation of the provisions of Act or Rules with an intent. e) Intentional and wilful suppression of facts cannot be presumed because (a) the appellant was operating under self-assessment or (b) because the appellant did not agree with the audit and claimed that CENVAT credit was admissible; or (c) because the appellant did not seek any clarification from the Revenue; or (d) because the officer did not conduct a detailed scrutiny of the Returns and the availment of CENVAT credit which is alleged to be inadmissible and was discovered only during audit. 26. We, therefore, find in favour of the appellant on the question of limitation. As the entire demand except what has been conceded by the appellant falls beyond the value period of limitation it is not necessary to examine the merits of the case. 27. For the above reasons, the impugned order is set aside except to the extent of denial of CENVAT credit or Rs. 1,45, 724 on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
