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TMI Blog2023 (9) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... five years has been substituted. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] , the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since suppression of facts‟ has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. It would transpire from the aforesaid decision that mere suppression of facts is not enough and there must be a deliberate and wilful attempt on the part of the assessee to evade payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2010, providing exemption from payment of service tax on the advances received before 01.07.2010 towards the services taxable under section 65(105)(zzq) and section 65(105)(zzzh) of the Finance Act, i.e., commercial or industrial construction services, and construction of complex services. 4. The appellant claims that it received an amount of Rs. 2,71,61,037/- as advances towards construction of residential complex through various cheques from the buyers of dates prior to 01.07.2010 and these cheques had also been received prior to 01.07.2010. The appellant further asserts that it issued receipts cum invoices detailing the name, property details, cheque details towards all these payments prior to 01.07.2010. According to the appellant, this fact is also clear from the ledger entries of the buyers, though the cheques were subsequently deposited in the bank and cleared after 30.06.2010 but none of the cheques were dishonoured. 5. The records of the appellant were audited by the Central Excise Officers, Jaipur-I on 21.11.2011 and by an Internal Audit Report dated 28.02.2012 it was noted that on the amount received by the appellant as advances through cheques dated 30.06.2010, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been invoked in the facts and circumstances of the case. 11. The Commissioner (Appeals), by the impugned order dated 13.03.2018, upheld the order dated 13.10.2014 passed by the Additional Commissioner on merits as well as on limitation. 12. This appeal has been filed to assail the order passed by the Commissioner (Appeals). 13. Ms. Sukriti Dass and Ms. Masuma Rizvi, learned counsel appearing for the appellant made the following submissions: (i) The date of receipt of cheque is the relevant date for availing benefit under the Notification. Hence, the appellant is entitled to the benefit of exemption as it received the cheques prior to the cut-off date 01.07.2010. In support of this contention learned counsel placed reliance upon the decisions of the Supreme Court in Commissioner of Income Tax, Bombay South, Bombay vs. Ogale Glass works Ltd., Ogale Wadi [(1955) 1 SCR 185] and K. Saraswathy Alias K. Kalpana vs. P.S.S. Somasundaram Chettiar [(1989) 4 SCC 527]; (ii) The Commissioner (Appeals) denied the benefit of the Notification on an assumption and held that receipt of cheques on 30.6.2010 is an afterthought with an intention to avoid payment of tax. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed/credited to the government account after 01.07.2010. Thus, the service tax was liable to be levied on the appellant. Learned authorised representative also submitted that the extended period of limitation was correctly invoked in the facts and circumstances of the case. 15. The submissions made by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 16. The issues that arise for consideration in this appeal are as to whether the appellant was entitled to claim exemption from payment of service tax under the Notification made effective from 01.07.2010 in respect of advance payment received through cheques issued on or before 30.06.2010 but realized after 01.07.2010, and whether the extended period of limitation could have been invoked in the facts and circumstances of the case. 17. It would be appropriate to reproduce the relevant portion of the show cause notice dated 19.03.2013 containing the allegations and it is reproduced below: 2. Whereas during the course of audit by the officers of Central Excise Commissionerate, Jaipur-l, it was observed that the assessee has provided service of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication read with the corrigendum makes it clear that the said notification, inter alia exempt service on construction of residential complex service to the extent of Service tax calculated on consideration received before 01.07.2010. In the facts of the present case, the Noticee received payment towards construction of residential complex service vide cheques dated 30.06.2010. The SCN has proposed to deny exemption on the basis of the reasoning that in case of cheques the date of honouring of cheques is relevant date for receipt of payment. In this regard, the SCN has placed reliance on CBEC letter F. No. 137/10 2000-CX.4 dated 16.07.2001, wherein it was clarified that, AS PER RBI INSTRUCTIONS, WHEN THE PAYMENT IS MADE EITHER IN CASH OR BY THE DEMAND 'DRAFT, IMMEDIATE CREDIT HAS TO BE TAKEN. WHEN A CHEQUE IS TENDERED, THE MONEY STILL REMAINS IN ASSESSEE'S ACCOUNT AND IS NOT TRANSFERRED TO THE BANK. WHEN THE CHEQUE IS CLEARED BY THE CLEARING HOUSE OF THE BANK, THE MONEY GETS DEPOSTED IN THE BANK. TILL THE DATE OF CLEARANCE THE MONEY IS NOT CREDITED TO THE DESIGNATED BANK. I.E. THE MONEY IS NOT CREDITED TO THE GOVERNMENT OF INDIA ACCOUNT AS PROVIDED UNDER RULE 6 OF SE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it infers that receipt of cheque on 30.6.2010 is a clear after- thought and the appellant has taken the cheques of 30.6.2010 in later dates, with an intention to avoid service tax. (emphasis supplied) 22. Regarding the invocation of the extended period of limitation, the Commissioner (Appeals) observed as follows: 13. Regarding imposition of the extended period of limitation, the appellant has misinterpreted the version. The extended period of limitation has not been imposed on the ground that the Applicant did not approach the department seeking clarification. The inference is that the facility of approaching the department was always available to the appellant for any clarification. I find that the matter came to notice of the department as a result of Audit and had the Audit not been conducted, the non-payment of service tax would not have been detected. Thus, extended period provisions have rightly been invoked. Demand alongwith interest has been rightly confirmed and Penalty has been rightly imposed. The show cause notice has been issued as per statute. (emphasis supplied) 23. Learned counsel for the appellant submitted that as the entire period is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: PROVIDED that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words one year , the words five years had been substituted. 28. It would be seen from a perusal of sub-section (1) of section 73 of the Finance Act that where any service tax has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the service tax which has not been levied or paid, requiring him to show cause why he should not pay amount specified in the notice. 29. The relevant date‟ has been defined in section 73 (6) of the Finance Act as follows; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being honoured and encashed relates back to the date of the receipt of the cheque, and in law the date of payment is the date of delivery of the cheque. Payment by cheque is an ordinary incident of present-day life, whether commercial or private, and unless it is specifically mentioned that payment must be in cash there is no reason why payment by cheque should not be taken to be due payment if the cheque is subsequently encashed in the ordinary course. (emphasis supplied) 32. In view of the aforesaid decision of the Supreme Court, the appellant may have been under a bonafide belief that even though the cheque may have been of a date prior to 01.07.2010 and encashed after 01.07.2010, but the date of the cheque would be the date of payment if the cheque was not dishonoured. It is not the case of the department that the cheque was dishonoured. Such being the position, the appellant may be justified in bonafide believing that it was not liable to pay service tax in terms of the Notification. There would, in such circumstances, be no suppression of facts. 33. Even assuming that there was suppression, it has to be examined whether suppression was wilful and with an inten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of court the context in which it has been used 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. (emphasise supplied) 36. This decision was referred to by the Supreme Court in Anand Nishikawa Company Ltd. vs. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC)] also held: 10. The expression suppression has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or collusion and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. (emphasis supplied) 39. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication) [2018 (12) GSTL 368 (Del.)] also examined at length the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Finance Act and held as f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d suggest that MTNL had knowingly and with a deliberate intent to evade the service tax, which it was aware would be leviable, suppressed the fact of receipt of consideration for rendering any taxable service. On the contrary, the statements of the officials of MTNL, relied upon by the respondents, clearly indicate that they were under the belief that the receipt of compensation/financial support from the Government of India was not taxable. Absent any intention to evade tax, which may be evident from any material on record or from the conduct of an assessee, the extended period of limitation under the proviso to Section 73(1) of the Act is not applicable. The facts of the present case indicate that MTNL had made the receipt of compensation public by reflecting it in its final accounts as income. As stated above, merely because MTNL had not declared the receipt of compensation as payment for taxable service does not establish that it had willfully suppressed any material fact. MTNL‟s contention that the receipt is not taxable under the Act is a substantial one. No intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return. (emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke only eligible CENVAT credit and if it does not do so, it amounts to suppression of facts with an intent to evade and violation of Act or Rules with an intent to evade. We do not find any force in this argument because every assessee operates under self-assessment and is required to self-assess and pay service tax and file returns. If some tax escapes assessment, section 73 provides for a SCN to be issued within the normal period of limitation. This provision will be rendered otiose if alleged incorrect self-assessment itself is held to establish wilful suppression with an intent to evade. To invoke extended period of limitation, one of the five necessary elements must be established and their existence cannot be presumed simply because the assessee is operating under self-assessment. (emphasis supplied) 43. In the present case, as noticed above, the Commissioner (Appeals) did not even record a finding that the appellant had any intention to evade payment of service tax since all that has been recorded in the impugned order by the Commissioner (Appeals) is that the correct facts came to the notice of the department only when the audit was conducted. In the absence o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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