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TMI Blog2024 (4) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... r under the facts and circumstances of the case and in law, the CESTAT was correct in holding that intention to evade service tax is absent in the present case? (b) Whether under the facts and circumstances of the case and in law, the CESTAT was correct in setting aside at invocation of extended period of limitation for issue of Show Cause Notice under proviso to sub-section (1) of Section 73 of Finance Act, 1994? (c) Whether under the facts and circumstances of the case and in law, the CESTAT was correct in applicability of sub-section (3) of Section 73 of Finance Act, 1994 without appreciating Section 73(4) of the Finance Act, 1994? (d) Whether under the facts and circumstances of the case and in law, the CESTAT was correct in setting aside the penalties levied under Section 77 & 78 of the Finance Act, 1994? (e) Whether under the facts and circumstances of the case and in law, the CESTAT was correct in not following its own decision in the case of Master Marine Services P. Limited reported at 2014(35) STR 79 (Tri. Mumbai)?" 3. Briefly, the facts are:- The Respondent is engaged in providing service taxable under the category of "construction of complex service", wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . They also failed to file proper ST-3 returns and suppressed the material facts, thus making themselves liable for penalty under Section 78 of the Finance Act , 1994 in as much as they have: (a) suppressed the above stated facts with mala fide intention to evade payment of Service Tax as they: (i) were aware that Service Tax is payable on the taxable services provided by them during the period 2010-11 to 2015-16 but failed to determine the taxable value correctly and consequently failed to pay appropriate Service Tax thereon as required under Section 67 of the Finance Act, 1994; (ii) failed to take registration after imposition of Service Tax on Construction Services i.e. after 01.07.2010 and continued to provide the Taxable Service without obtaining Service Tax Registration. Thus, they have suppressed the fact from the Department and liable for penalty under Section 78 of the Finance Act, 1994; (iii) failed to file the ST-3 returns for the period 2010-11 to 2015-16 within the time specified under Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994; (iv) had intentionally suppressed the taxable value of services by not filing their ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvoke the extended period of limitation. 8. The Commissioner, after granting an opportunity of hearing to the Respondent, adjudicated the show cause notice, by an Order-in-Original dated 15th December, 2017, whereby the amount of tax already deposited by the Respondent of Rs. 7,07,02,774/- was confirmed and was directed to be appropriated and penalty was imposed in terms of operative paragraphs 4, 5 and 6 of the Order-in-Original which read thus:- "4:- I impose Penalty/Late fee of Rs. 1,45,700/- (as worked out in the table of Para 18 above) on M/s. Tharwani Infrastructures for not filing/ late filing of ST-3 returns under Section 70 of the Finance Act, 1994 read with Rule 7C of the Service Tax Rules, 1994; 5:- I impose penalty of Rs. 10,000/- on M/s. Tharwani Infrastructures under Section 77 of the Finance Act, 1994 as amended for their failure to furnish information as and when called by the Central Excise officer in accordance with the provisions of the Finance Act, 1994 or Rules made thereunder; and 6:- I impose penalty of Rs. 7,07,02,774/- (Rupees Seven Crore Seven Lakh Two Thousand Seven Hundred and Seventy Four only) on M/s. Tharwani Infrastructures under Section 78 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposition of penalty and, accordingly, set aside the order-in-original against the Department. 10. Ms. Masurkar, learned Counsel for the Revenue, in support of the Appeal, has limited submissions. Her submissions are not different from what was urged in the adjudication of the show cause notice, and as to what was observed by the Commissioner in passing the Order-in-Original, namely that the conduct of the Respondent in the present case amounted to suppression of material facts, as it was only after the department issued several summons, the Respondent came forward to make payment of tax and interest, failing which, the Respondent would not have ever discharged its tax liability. It is, hence, her contention that what was set out in the show cause notice with regard to the Respondent's suppressing material facts, clearly entitled the Revenue to invoke the extended period under the proviso to sub-section (1) of Section 73 of the Finance Act. It is submitted that sub-section (4) of Section 73 of the Act is an exception to sub-section (3) which would be independently applicable in the event, when any service tax has not been levied or paid or has been short-levied or short-paid or e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010-11 to 2015-16. 14. For appreciating the rival contentions in the present facts and circumstances, we may observe that the effect which is brought about by subsection (3) of Section 73 of the Finance Act, 1994 would be required to be considered. It would be necessary to note the provisions of sub-sections (1), (3) and (4) of Section 73 of the Finance Act, 1994, which reads thus:- "73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within [thirty months] 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of service tax, has not been established against the person chargeable with the service tax, to whom the notice was issued, the Central Excise Officer shall determine the service tax payable by such person for the period of [thirty months], as if the notice was issued for the offences for which limitation of [thirty months] applies under subsection (1).] (3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the [Central Excise Officer] of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid. PROVIDED that the [Central Excise Officer] may determine the amount of short payment of service tax or erroneously refunded service tax, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (c) in any other case, the date on which the service tax is to be paid under this Chapter, or the rules made thereunder; (ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made thereunder, the date of adjustment of the service tax after the final assessment thereof; (iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund]." 15. No doubt that the proviso below sub-section (1) would authorize the Revenue to invoke the extended period in case where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion, wilful misstatement or suppression of facts or contravention of any of the provisions of Chapter V or the rules made thereunder with intent to evade payment of service tax. However, what is imperative to be noted, is that the ingredients of sub-sections (a) to (e) of sub-section (4) are qualified by the condition that the assessee had an intention to evade payment of service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endeavoring to set aside truth, or to escape the punishment of the Law. (Tomlin) 'Evade' is capable of being used in two senses : (1) which suggests underhand dealing, (2) which means nothing more than the intentional avoidance of something, disagreeable (Simms v. Registrar of Probates, 6 LJPC, 56) .... .... .... .... .... .... .... ...." 19. In Tamilnadu Housing Board v/s. Collector of Central Excise, Madras and Another (1995) Supp. 1 SCC 50, the Supreme Court has held that the word "evade" in the context of the Central Excise law would mean defeating the provisions of law of paying duty. 20. Thus, evasion is one of the basic requirements for applicability of the extended period under the proviso to sub-section (1) and also in regard to applicability of sub-section (4) of Section 73 of the Finance Act, 1994. 21. It is not in doubt that Respondent, much prior to the issuance of the show cause notice, paid the service tax as also the interest thereon as already noted by us. If this be the case, certainly, the designated officer was not correct in issuing a show cause notice to pass the Order-in-Original. It has been rightly interfered by the Tribunal observing that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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