9911796707
TMI Blog2025 (1) TMI 626X X X X Extracts X X X X X X X X Extracts X X X X ..... s the demand of service tax with interest and penalty. The period involved in this appeal is from April 2012 to March 2013 and the show cause notice is dated 22.10.2014. 3. In Service Tax Appeal No. 50541 of 2017, the demand for the period April 2008 to 2012 has been raised under three categories of service namely "rent-a-cab service", "renting of immovable property" and luggage booking under "business support service". 4. Though number of submissions were advanced by Shri Ankur Upadhyay, learned counsel for the appellant for setting aside the demands raised under the aforesaid three heads of service but learned counsel for the appellant submitted that the impugned order deserves to be set aside for the sole reason that the show cause notice was issued beyond the period stipulated in the proviso to section 73(1) of the Finance Act 1994 [the Finance Act], as it stood at the relevant time. In this connection, learned counsel pointed out that in respect of the aforesaid three services, earlier a show cause notice dated 01.10.2009 was also issued to the appellant for the period 2004-05 to March 2008. Thus, when all facts were in the knowledge of the department in 2009, powers under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uing several letters and reminders they have not submitted the desired documents and thus suppressed the facts from the department and thus they have render them self liable for penalty under Section 78 of the Finance Act, 1994." 8. The appellant filed a reply to the show cause notice and contended that the extended period of limitation could not have been invoked. Paragraph 8 of the reply filed by the appellant is reproduced below: "8. Secondly the show cause notice is time barred as at the one hand the department was in knowledge of all the facts and on the other hand there are no grounds to allege any suppression or malafide intention of the Noticee with intention to evade payment of service tax. Even the show cause notice does not point out any instance which can show that the Noticee has suppressed anything from the department with malafide intention. In such circumstances that when the department came to know of the renting of buses by the noticee and the noticee had no malafide intention, the invocation of longer period of limitation for issuance of show cause notice is absolutely illegal. Since all the facts about the activities of the Noticee were in the knowledge of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the above Judgment of Honb'le Supreme Court the show cause notice is rightly issued in accordance with the provisions of section 73(1) of the Finance Act, 1994." (emphasis supplied) 10. The Commissioner (Appeals) also examined this issue in paragraph 6 of the order dated 16.11.2016 and found no infirmity in the order passed by the Joint Commissioner. The relevant portion of the order is reproduced below: "6. As regards limitation, I find that the demand notice was issued on 12.03.2013 and covers the financial year 2008-09 to 2011-12. I find no infirmity with the issue of the demand and the period covered is well within 5 years. I have also considered the case laws relied upon by the appellants but find that the ratios of these cases are not in conformity of the circumstances of the appellants's case." (emphasis supplied) Service Tax Appeal No. 51813 of 2017 11. The show cause notice dated 22.10.2014 was issued to the appellant under section 73(1A) of the Finance Act. Neither the adjudicating authority nor the Commissioner (Appeals) have examined the issue relating to invocation of the extended period of limitation. 12. In order to appreciate the contention tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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;" 15. The proviso to section 73(1) of the Finance Act stipulates that where any service tax has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Chapter or the Rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax, the provisions of the said section shall have effect as if, for the word "one year", the word "five years" has been substituted. 16. It is correct that 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 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise 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 both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of court the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful 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) 19. This decision was referred to by the Supreme Court in Anand Nishikawa Company Ltd. vs. Commissioner of Central Excise [2005 (188) E.L.T. 149 (SC)] and the observations are as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct." (emphasis supplied) 22. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication) [2018 (12) GSTL 368 (Del.)] also examined at length the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Finance Act and held as follows: "27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt 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) 24. It would transpire from the aforesaid decisions that mere suppression of facts is not enough and there must be a deliberate and wilful attempt o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any force in this argument because every assessee operates under selfassessment and is required to self-assess and pay service tax and file returns. If some tax escapes assessment, section 73 provides for a SCN to be issued within the normal period of limitation. This provision will be rendered otiose if alleged incorrect selfassessment itself is held to establish wilful suppression with an intent to evade. To invoke extended period of limitation, one of the five necessary elements must be established and their existence cannot be presumed simply because the assessee is operating under self-assessment." (emphasis supplied) 26. The Tribunal in M/s. Kalya Constructions Private Limited vs. The Commissioner, Central Excise Commissionerate, Udaipur [Service Tax Appeal No. 54385 of 2015 decided on 15.11.2023] observed as follows: "11. Both the SCNs further state that had the audit not conducted scrutiny of the records, the short paying the service tax would not have come to notice. It is a matter of fact that all the details were available in the records of the appellant. The appellant was required to furnish returns under section 70 with the Superintendent of Central Excise whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary call for such records and documents from the assessee, but that was not done. It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that the appellant should have filed a proper assessment return under rule 6 of the Rules." (emphasis supplied) 28. Civil Appeal No. 4246 of 2023 (Commissioner of CGST, Customs and Central Excise vs. Sunshine Steel Industries) filed by the department to assail the aforesaid decision of the Tribunal in Sunshine Steel Industries was dismissed by the Supreme Court on 06.07.2023 and the judgment is reproduced below: "Delay condoned. 2. Heard learned counsel for the appellant. 3. This Court is not inclined to interfere with the impugned order of the High Court (Sic). 4. The appeal is dismissed. 5. Pending applications, if any, are disposed of." 29. In Commissioner of C. Ex. & Customs vs. Reliance Industries Ltd. [2023 (385) E.L.T. 481 (S.C.)], the Supreme Court held that if an assessee bonafide believes that it was corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of including the value of deemed exports within the value of domestic clearances." (emphasis supplied) 30. Very recently, in Commissioner CGST Delhi South vs. Air India Ltd. [SERTA 18/2024 decided on 22.10.2024], the Delhi High Court held: "17. It is material to note that there is no allegation against the assessee of any statutory contravention with an intent to evade tax. The case of the Revenue is solely premised on the basis that there was suppression of facts on the part of the assessee. Clearly, not producing the documents, which may be necessary for substantiating a claim, does not fall in the exception of "suppression of facts". In any view of the matter, no express allegations were made in the SCN to the said effect." 31. What, therefore, transpires from the aforesaid decisions is that there can be a difference of opinion between the department and an assessee. An assessee may genuinely believe that duty is not leviable, while the department may believe that duty is leviable. The assessee may, therefore, not pay duty in the self-assessment carried out by the assessee, but this would not mean that the assessee has wilfully suppressed facts. To invoke the exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere in the knowledge of the department and the department cannot allege that facts had been suppressed. In any case, even if it is assumed that facts were suppressed by the appellant then too no reason has been assigned in the orders passed by the Joint Commissioner or the Commissioner (Appeals) that such suppression was with an intent to evade payment of service tax. This apart, service tax has been demanded on the basis of profit and loss account and balance sheet, which are public documents which the department could have ascertained. The issue involved in this appeal also relates to interpretation of law. The decisions referred to above have clearly held that in such circumstances there can be no suppression of facts with an intent to evade payment of service tax. 34. The impugned orders dated 16.11.2016 and 17.08.2017 passed by the Commissioner (Appeals), therefore, deserve to be set aside on the sole ground that the extended period of limitation contemplated under the proviso to section 73 (1) of the Finance Act could not have been invoked in the facts and circumstances of the case. 35. The orders dated 16.11.2016 and 17.08.2017 passed by the Commissioner (Appeals) are, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
