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2025 (1) TMI 540

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..... r 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. It is in this context that the Supreme Court observed that the act must be deliberate to escape payment of duty. In EASLAND COMBINES VERSUS COLLECTOR OF C. EX., COIMBATORE [ 2003 (1) TMI 107 - SUPREME COURT ] the Supreme Court observed that for invoking the extended period of limitation, duty should not have been paid because of fraud, collusion, wilful statement, suppression of fact or contravention of any provision. These ingredients postulate a positive act and, therefore, mere failure to pay duty which is not due to fraud, collusion or wilful misstatement or suppression of facts is not sufficient to attract the extended period of limitation. It is, therefore, clear that the mere fact that the belief of the appellant was found to be incorrect by the authorities will not render such a belief of the assessee to be a malafide belief. The assertion that there was suppression of facts is, therefore, not tenable. Conclus .....

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..... t facts had not been pointed out by the appellant and it is only when the audit was conducted that the department came to know that the appellant was actually providing cargo handling service and not transportation of goods by road service . 10. It would, therefore, be appropriate to first reproduce the provisions of section 73(1) of the Finance Act, as they stood at the relevant time, and 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 eighteen 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 (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the r .....

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..... there has been short payment or non-payment of tax on account of fraud, collusion, willful mis- statement, suppression of facts or contravention of any of the provisions of this Chapter (chapter V of Finance Act, 1994) or of the rules made there-under with intent to evade payment of service tax are present. I find that the noticee is a service tax registrant since long and well aware of the provisions of law. I find that despite clarification issued by the Board has vide Circular No.232/2/2006-EX.4 dated 12.11.2007, the noticee neither sought any clarification from the department not paid due amount of service tax. This proves deliberate deviance on the part of the noticee with intent to evade payment of service tax. Tender as referred in foregoing para was issued for a composite work but the division of the same by the noticee indicates towards their ill intention to evade payment of service tax. These are sufficient grounds to invoke provisions of extended period for recovery of service tax. In the case of Union of India v. Rajasthan Spinning Weaving Mills [2009(238) ELT.3(S.C.)], the Hon'ble Supreme Court observed that in case the non-payment of duty is intentional and by ad .....

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..... ful 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 omission by one to do what he might have done and not that he must have done, does not render it suppression. (emphasis supplied) 18. This decision of the Supreme Court in Pushpam Pharmaceuticals was followed by the Supreme Court in Anand Nishikawa Co. Ltd. vs. Commissioner of Central Excise, Meerut [(2005) 7 SCC 749] and the relevant paragraph is as follows: 27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceuticals Co. v. CCE we find that suppression of facts can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty. When facts were known to both the parties, the omission by one to do what he might have done and not that he must have done, would not render it suppression. It is settled law that mere failure to .....

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..... specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso. (emphasis supplied) 21. The Supreme Court in Commissioner of Central Excise and Customs vs. Reliance Industries Limited [2023 (385) ELT 481] had an occasion to examine this aspect of the matter and the relevant observations are as follows: 23. We are in full agreement with the finding of the Tribunal that during the period in dispute it was holding a bona fide belief that it was correctly discharging its duty liability. The mere fact that the belief was ultimately found to be wrong by the judgment of this Court does not render such belief of the assessee a mala fide belief particularly when such a belief was emanating from the view taken by a Division Bench of Tribunal. We note that the issue of valuation involved in this particular matter is indeed one were two plausible views could co-exist. In such cases of disputes of interpretation of legal provisions, it would 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 .....

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..... was suppression of facts is therefore clearly not tenable. (emphasis supplied) 22. It is, therefore, clear that the mere fact that the belief of the appellant was found to be incorrect by the authorities will not render such a belief of the assessee to be a malafide belief. The assertion that there was suppression of facts is, therefore, not tenable. 23. The Commissioner has also, in the impugned order, stated that in case there was any doubt, it was for the appellant to have sought a clarification from the department. 24. It is also not possible to accept this view expressed by the Commissioner. The Delhi High Court in Mahanagar Telephone Nigam Limited vs. Union of India [2023-TIOL-407-HC-DEL-ST] held otherwise, and the relevant observations of the Delhi High Court are as follows: As noted above, the impugned show cause notice discloses that the respondents had faulted MTNL for not approaching the service tax authorities for clarification. The respondents have surmised that this would have been the normal course for any person acting with common prudence. However, it is apparent from the statements of various employees of MTNL that MTNL did not believe that the amount of compensat .....

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