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TMI Blog2024 (8) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Section 73 (1) of the Finance Act does not mention that suppression of facts has to be wilful‟ since wilful‟ precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression wilful before suppression of facts under section 73(1) of the Finance Act, suppression of facts has still to be willful and with an intent to evade payment of service tax. The Supreme Court and the Delhi High Court have held that suppression of facts has to be wilful‟ and there should also be an intent to evade payment of service tax. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bonafide manner. There is no suppression of material facts from the department, much less with an intent to evade payment of service tax. The extended period of limitation contemplated under the proviso to section 73(1) Finance Act, therefore, could not have been invoked in the facts and circumstances of the case. It will, therefore, not be necessary to examine the contention raised by learned counsel for the appellant that the order should be set aside as the time limit specified in section 73(4B) of the Finance Act had not been adhered to. The impugned order 30.12.2016 passed by the Commissioner, therefore, cannot be sustained and is set aside - Appeal allowed. - MR. DILIP GUPTA, PRESIDENT AND MR. P. ANAJNI KUMAR, MEMBER (TECHNICAL) Shri J.K. Mittal, Advocate with Shri Kapil Kant, Advocate for the Appellant Shri Rajeev Kapoor, Authorized Representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of 20%, on which it is liable to pay interest of Rs. 5,16,956/-. V. Short-payment of Service Tax (a) For the period April-June, 2006, the appellant short-paid service tax of Rs. 13,85,051/-, as reflected in ST-3 returns. VI. Non-payment of Service Tax on services rendered to SEZ units during 03.03.2009 to 20.05.2009 (a) The appellant rendered services to a SEZ Unit during 03.03.2009 to 20.05.2009 for Rs. 1,07,879/-, on which it is liable to pay service tax of Rs. 11,112/-. VII. Interest on late payment of Service Tax (a) Service tax liability for the months of September, 2007 and March, 2008 was deposited by the appellant after the due date. Thus, the appellant is liable to pay interest of Rs. 5,231/-. 4. The show cause notice also invoked the extended period of limitation under the proviso to section 73(1) of the Finance Act and the allegations made in the show cause notice on this aspect are as follows: 11. From the foregoing it appears that the assessee has contravened the following provisions of Service Tax, the Chapter V of the Finance Act, 1994, as amended, read with the provisions of Service Tax Rules, 1994, as amended. a) Section 66 of the Finance Act, 1994 as amended, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of impugned Service Tax. The fact of rendering of these services and availment of inadmissible CENVAT Credit would not have come to the notice of the department but for the audit conducted by the department. Thus, it appears that the provision of proviso to Section 73 (1) of the Act ibid can be invoked and thus demand and recovery can be made for non-payment of Service Tax for five years from the relevant date. (emphasis supplied) 5. The appellant filed a detailed reply to the show cause notice. Apart from denying the leviability of service tax, the appellant also contended that the extended period of limitation could not have been invoked in the facts and circumstances of the case. 6. The Commissioner held that the department was justified in invoking the extended period of limitation and confirmed the demand of service tax. 7. In regard to the extended period of limitation, the Commissioner observed as follows: 23.(a) So far as invocation of extended period is concerned, I find that Section 68 of the Finance Act, 1994 provides that every person providing taxable service to any person shall pay Service Tax at the specified rates and in such manner and within such period as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax not levied or paid or short levied or short paid or erroneously refunded. It is as follows; 73.(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 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. 14. It would be seen from a perusal of sub-section (1) of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs made herein above that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it was not open to the Central Excise Officer to proceed to recover duties in the manner indicated in proviso to Section 11A of the Act. (emphasis supplied) 20. These two decisions in Pushpam Pharmaceuticals and Anand Nishikawa Company Ltd. were followed by the Supreme Court in the subsequent decision in Uniworth Textile Limited vs. Commissioner of Central Excise, Raipur [2013 (288) E.L.T. 161 (SC)] and the observation are: 18. We are in complete agreement with the principal enunciated in the above decisions, in light of the proviso to section 11A of the Central Excise Act, 1944. 21. 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said paragraph, it merely mentions that by doing so the appellant had intentionally and willfully suppressed facts and did not pay the service tax; by not disclosing the entire facts to the department, the taxable value escaped the assessment resulting into contravention of various provisions of the Finance Act with intention to evade payment of service tax; and had the audit not been conducted by the department this fact would not have come to the notice of the department. 25. The show cause notice, therefore, presumes that there was intent to evade payment of service tax merely because the appellant had not disclosed the correct service tax liability in the service tax returns. The show cause notice does not disclose why the appellant had an intent to evade payment of service tax. Merely because the correct service tax liability had not been disclosed, it cannot be presumed that there was an intent to evade payment of service tax. The Commissioner has also upheld the invocation of the extended period of limitation for the reason that under the self-assessment scheme, proper service tax disclosure is on the appellant, but the appellant suppressed all material facts from the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be totally unjustified to invoke the extended period of limitation by considering the assessee s view to be lacking bona fides. In any scheme of self-assessment it becomes the responsibility of the assessee to determine his liability of duty correctly. This determination is required to be made on the basis of his own judgment and in a bona fide manner. 24. The extent of disclosure that an assessee makes is also linked to his belief as to the requirements of law. xxxxxxxxxxx. On the question of disclosure of facts, as we have already noticed above the assessee had disclosed to the department its pricing policy by giving separate letters. It is also not disputed that the returns which were required to be filed were indeed filed. In these returns, as we noticed earlier there was no separate column for disclosing details of the deemed export clearances. Separate disclosures were required to be made only for exports under bond and not for deemed exports, which are a class of domestic clearances, entitled to certain benefits available otherwise on exports. There was therefore nothing wrong with the assessee s action of including the value of deemed exports within the value of domestic c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficers also emphasise upon the duty of officers to scrutinize the returns. The instructions issued by the Central Board of Excise Customs on December 24, 2008 deal with duties, functions and responsibilities of Range Officers and Sector Officers . It has a table enumerating the duties, functions and responsibilities and the relevant portion of the table is reproduced below: xxxxxxxxx 26. The Central Excise Manual published by CBEC on May 17, 2005, which is available on the website of CBEC, devotes Part VI to SCRUTINY OF ASSESSMENT. xxxxxxxxxx 27. It is thus evident that not only do the 2002 Rules mandate officers to scrutinise the Returns to verify the correctness of self assessment and empower the officers to call for documents and records for the purpose, Instructions issued by the department also specifically require officers at various levels to do so. (emphasis supplied) 30. There is, therefore, no suppression of material facts from the department, much less with an intent to evade payment of service tax. The extended period of limitation contemplated under the proviso to section 73(1) Finance Act, therefore, could not have been invoked in the facts and circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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