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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 ..... section 65(105)(zzzh) and provided that construction of a complex intended for sale by a builder shall be deemed to be a service provided by the builder to the buyer. Thus, such services rendered by builders to prospective buyers were also subjected to levy of service tax. 3. It is in this context that the Government issued a Notification No. 36/2010-ST dated 28.6.2010 [the Notification], corrected by Corrigendum dated 29.6.2010, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest and imposed penalty amounting to Rs. 6,99,373/- under section 78 of the Finance Act. The order also justified the invocation of the extended period of limitation. 10. The appellant filed an appeal before the Commissioner (Appeals) against the order dated 13.10.2014 submitting that the exemption was correctly claimed under the Notification and in any case, the extended period of limitation could not have 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring for the department, however, supported the impugned order and submitted that it does not call for any interference in this appeal. Learned authorised representative submitted that the appellant was clearly not eligible to the benefit of the Notification as all the cheques were deposited in the bank after the cut of date i.e, 01.07.2010 and the cheques were realized/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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax and as such the proviso to Section 73(1) of the Finance Act, 1994 for extended period appeared to be invokable in the instant case. xxxxxxxxx" (emphasis supplied) 19. The relevant portion of the order passed by the Additional Commissioner denying the benefit of the Notification is reproduced below: "23. A perusal of the above notification 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 REMA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted at later dates. For instance, 8 cheques have been deposited on 03.7.2010 for the first time and the last cheque has been deposited on 18.9.2010. It is not comprehendible that cheques of so high denomination kept for months together without depositing in the bank and losing interest thereon. Thus, from the pattern, 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulated by this Court in its order dated 29 November, 1979. In Commissioner of Income Tax, Bombay South, Bombay v. Messrs Ogale Glass Works Ltd. Ogale Wadi, A.I.R. 1954 S.C. 429 it was laid down by this Court that payment by cheque realised subsequently on the cheque 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 believi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te and with an intent to escape payment of duty. The observations are as follows; "4. Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. 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 omissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight of the proviso to section 11A of the Central Excise Act, 1944." 38. The Supreme Court in Continental Foundation Joint Venture Holding vs. Commissioner of Central Excise, Chandigarh-I [2007 (216) E.L.T. 177 (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 Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uppressed material facts for evading its tax liability, is sustainable. xxxxxxxxx 41. In the facts of this case, the impugned show cause notice does not disclose any material that could 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 content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f limitation given in the impugned order is that the appellant was operating under self-assessment and hence had an obligation to assess service tax correctly and take 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 imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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