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TMI Blog2024 (11) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation in cases involving interpretation of law is not invokable is a settled issue and it has been held by the judicial forums that extended period of limitation in not sustainable in such cases. There is no other ground on which the extended period of limitation can be invoked. 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 active suppression with an intent to evade payment of service tax. In other words, without an intent being established, extended period of limitation cannot be invoked. Thus, the central excise officer has an obligation to make his best judgment if either the assessee fails to furnish the returns or, having filed the return, fails to assess tax in accordance with the Act and Rules. 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. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the provisions of the Finance 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 or (c) because the officer did not conduct a detailed scrutiny of the Returns and the escapement of tax was discovered only during audit. We, therefore, find in favour of the respondent on the question of limitation. It is therefore, not necessary to examine the merits of the case. - HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT And HON'BLE MR. P. V. SUBBA RAO, MEMBER ( TECHNICAL ) Shri S. K. Meena, authorised representative for the Appellant Shri Atul Gupta, Chartered Accountant and Shri Varun Gaba, advocates for the Respondent ORDER P. V. SUBBA RAO : Revenue has filed this appeal to assail order in original the impugned order dated 28.3.2018 passed by the Commissioner in which he dropped the proceedings initiated against M/s. Haamid Real Estate Pvt. Ltd., New Delhi the respondent by Show Cause Notice SCN dated 15.11.2016. 2. The respondent is registered with the service tax department and has been providing taxable services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd has been proposed under the provisions after 1.7.2012 under Section 65B (44). No invoice was ever issued and the payments for transfer of development rights were received in terms of the agreements which were entered into prior to 1.7.2012. Therefore, the demand cannot be sustained and has been correctly dropped by the Commissioner. ii) Extended period of limitation is not invokable in the present case as there was considerable confusion about taxability of transfer of development rights. These were not taxable in the pre-negative list regime as there was no head under which they could be taxed. The respondent was under the bonafide belief that no tax was payable and had not paid tax. The SCN dated 15.11.2016 was issued to cover the period 2012-13 which was clearly beyond the normal period of limitation. There were no grounds to invoke extended period of limitation. 7. We have considered the submissions on both sides and perused the records. 8. We first proceed to examine the question of limitation because if the demand is hit by limitation, the merits of the case need not be considered. The SCN was issued on 15.11.2016 covering the period 2012-13 which was clearly beyond the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of C. Ex. Pune II 2007 (211) ELT 13 (SC) (ii) Commissioner of Customs Import vs. Reliance Industries Ltd. 2015 (325) ELT223 (SC) (iii)Escorts Ltd. vs. Commissioner of Central Excise, Faridabad 2015 (319)ELT 406 (SC) (iv) Taj Sats Air Catering Ltd. vs. Commissioner of Central Excise Delhi II 2016 (334) ELT 680 (Tri.-Del.) (v) CCE vs. Vineet Electrical Industies Pvt Ltd. 2002 (144) ELT A292 (vi) CCE vs. Raptakos Brett Co. 2006 (194) ELT 101 (Tri.-Mum) (vii) CCE vs. Rishabh Velveleen (P) Ltd. 1999 (114) ELT 839 (Tri.) (viii) Pee Jay Apparels (P) Ltd vs. CCE 2001 (135) ELT 842 (Tri.-Del.) (ix) Cosmic Dye Chemicals vs. CCE 1995 (75) ELT 721 (SC) 15.2. Thus, I find that the demand is also not sustainable on limitation aspect and thus liable to be dropped. 11. We find that the SCN invoked extended period of limitation for the following reasons: a) No disclosure was made by the assessee regarding this transaction in the ST-3 Returns filed during the relevant period; b) Thus, the service tax escaped assessment. c) Non-disclosure of the facts to the department resulted in contravention of various provisions of the Act and Rules with an intent to evade payment of service tax as applicable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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. 15. In this appeal, the case of the Revenue is that the appellant had not disclosed the transaction in its ST-3 Returns which resulted in escapement of service tax and, therefore, the non-disclosure resulted in contravention of the Finance Act and Rules with an intent to evade payment and but for the audit, the escapement of service tax would not have come to light. 16. The position of the appellant was, at the time of self-assessment, during the adjudication proceedings and also before us is that it is not liable to pay service tax. Thus, it is only a difference of opinion between the appellant and the Revenue. Naturally, the appellant self-assessed duty and paid service tax as per its view. The allegation in the SCN that the appellant had not disclosed this transaction in its ST-3 returns has no legs to stand on. ST-3 Return does not require transaction wise details. It only requires the assessee to disclose the aggregate value of the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment as per his best judgment. If the officer fails to scrutinise the returns and make the best judgment assessment and some tax which escaped assessment is discovered after the normal period of limitation is over, the responsibility for any loss of Revenue rests squarely on the shoulders of the officer. It is incorrect to say that had the audit not been conducted, the allegedly ineligible CENVAT credit would not have come to light. It would have come to light if the central excise officer had discharged his responsibility under section 72. 19. This legal position that the primary responsibility for ensuring that correct amount of service tax is paid rests on the officer even in a regime of self-assessment was clarified by the Central Board of Excise and Customs CBEC in its Manual for Scrutiny of Service Tax Returns the relevant portion of which is as follows: 1.2.1A The importance of scrutiny of returns was also highlighted by Dr. Kelkar in his report on Indirect Taxation Report of the Task Force on Indirect Taxation 2002, Central Board of Excise and Service Tax, Government of India. . The observation made in the context of Central Excise but also found to be relevant to Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 the Commissioner to empower any officer to carry out Scrutiny, verification and checks, as may be necessary to safeguard the interest of revenue . The Rule also allows the officer to call for any record maintained by the assessee for accounting of transactions, the trial balance or its equivalent, and the Income Tax Audit Report maintained under Section 44AB of the Income Tax Act. In other words, the Rule permits the officer to examine financial records for scrutinizing the return to determine the correctness of the assessments made. In pursuance of this, the Board has also issued guidelines vide letter F.No.137/27/2007 CX.4, dated 08.02.2007, which makes it mandatory to scrutinize returns on a regular basis. Details of the Board s guidelines on returns scrutiny are discussed in Chapter 2 of this Manual. 1.2.2B The guidelines clearly envisaged that returns scrutiny would become the core function of the Service Tax ..... 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