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TMI Blog2024 (12) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... on 73 (1) of the Finance Act and there is no necessity of any intent to evade payment of service tax, is against the well settled principles. Even if one assumes that there was suppression, it has to be examined whether suppression was wilful and with an intent to evade payment of service tax. The Hon ble Supreme Court in in Pushpam Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay [ 1995 (3) TMI 100 - SUPREME COURT] has held that suppression of facts has to be wilful‟ and there should also be an intent to evade payment of service tax. It is settled law that mere failure to declare does not amount to wilful suppression - The Department has not been able to establish any positive act of the appellant with an intent to evade. As 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. The sum and substance of the aforesaid discussion is that mere suppression of facts is not enough and there must be a deliberate and wilful attempt on the part of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, the appellant is benefited in the long run and it helps in marketing of appellant s goods and the same is applicable to R D and consultancy services as well. He contended that even otherwise the entire demand is hit by limitation. The payment for research and development services and consultancy services were made in the financial year 2011-12 and 2012-13 only and notice was issued on 20.01.2016, therefore, entire demand is for extended period. The appellant did not deposit service tax under the bona fide belief that since services were consumed out of India, therefore, no tax was payable. The entire transactions were duly recorded in the books of accounts and remittances were made in foreign currency through banking channel. The non-payment of tax was also noticed during the course of conducting audit of records of the appellant. The Ld. Counsel further contended that as the transaction were part of their audited books of accounts, therefore, suppression with intent to evade payment of tax cannot be alleged. Consequently, it was merely a case of non-payment of tax under bonafide belief. Imposition of 50% penalty (instead of 100%) under Section 78 by the appellate authority als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment. The admitted facts of the case are as follows: i. The appellant was registered under service tax and central excise and was subjected to audit by the department. ii. The appellant had paid Rs. 37,69,247 in foreign currency to the service providers but had not paid service tax under Reverse Charge Mechanism. iii. All the transactions were recorded in their financial statements. 6. As far as merits of the demand is concerned, we note that the findings in the impugned order is that the demand for R D and Consultancy services are liable to be taxed as the same received and consumed in India. In this context, we note the appellant is engaged in the manufacture of blasting machineries and any service related to its research and development or consultancy services received in this regard is for their commercial activity in India. Therefore, we agree with the findings that these were services for consumption in India. Therefore, on merit we hold that service tax was payable under RCM by the appellant. However, as regards the invocation of the extended period, we note that the Ld Counsel has submitted that notice was issued on 20.01.2016 and the entire demand fell under the extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. fraud; or b. collusion; or c. any wilful misstatement; or d. suppression of facts; or e. contravention of any of the provisions of this Act of the rules made thereunder with intent to evade payment of duty by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant dated, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under Section 11AA and a penalty equivalent to the duty specified in the notice. 8. The Hon ble Supreme Court in Pushpam Pharmaceuticals Company , 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 Hon ble Court observed that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not that he must have done, does not render it suppression. 10. It is settled law that mere failure to declare does not amount to wilful suppression. There must be some positive act from the side of the assessee to find wilful suppression. In the instant case, it is an admitted fact that all the transactions were declared in the financial records and the objection arose on scrutiny of such financial documents by the audit team. The Department has not been able to establish any positive act of the appellant with an intent to evade. As 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. We also note that 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 were as follows: 18. We are in complete agreement with the principal enunciated in the above decisions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (emphasis supplied) 20. It would transpire from the aforesaid decisions that mere suppressi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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