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TMI Blog2025 (1) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... the demand of interest and penalty for the amount of service tax confirmed for the Financial Year 2013-14 is beyond the period of limitation. Whether the extended period of limitation upto five years beyond the normal period of thirty months could have been invoked in the facts and circumstances of the case? - HELD THAT:- It is noticed that after excluding the service tax liability confirmed for the period 2013-14, only the service tax liability for the periods 2016-17 and 2017-18 would be within the normal period of limitation. - There has to be a deliberate attempt to evade payment of excise duty. The show cause notice must specifically deal with this aspect and the adjudicating authority is also obliged to examine this aspect in the light of the facts stated by the assessee in reply to the show cause notice. In Easland Combines, Coimbatore vs. Collector of Central Excise, 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, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x under reverse charge mechanism. The appellant claims that it discharged service tax liability on the advance receipts on account of construction services and on legal services under reverse charge mechanism. During the period 2013-14 to 2017-18, the appellant also gave corporate guarantees to various banks for credit facility sanctioned to associated enterprises. 3. A show cause notice dated 11.10.2019 was served upon the appellant demanding service tax of Rs. 2,40,96,546/- with the following breakup: Nature of service Differential amount of short payment Legal Services 16936 Corporate Gusrantee 5131512 Advances From Customers [Excluding Tax Already Paid On Commercial Construction Work Contract] (20551178-1601597) 18948098 Total 24,096,546 4. The show cause also invoked the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act and the relevant portion of the show cause notice relating to this issue is reproduced below: (ii) M/s Wellworth Project Developers Private Limited, 232-B, 4th Floor, Okhla Industrial Estate, Phase-III, New Delhi have suppressed the entire value of taxable services provide by them. They have not shown the proper va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not cooperate during the course of investigation. If a holistic consideration and analysis be taken of the facts and circumstances, then Ld. Adjudicating Authority will not find any justification for invocation of the extended period of limitation under the proviso to Section 73(1) of the Act. A.7 The Authorized persons of the Noticee vide their letter dated 22 January 2019 submitted the documents and details called for by the department. Had the Noticee, not given any documents as demanded by the officer in charge, on time, then it could have been interpreted that Noticee is trying to suppress any facts, which might have caused delay in investigation proceedings as well. A.8 Therefore, it is submitted that invocation of the extended period of limitation is unsustainable since the complete and relevant facts with regard to the transactions in issue were available with the Department and were within its knowledge and there is no question of willful suppression, fraud or intent to evade payment of service tax. xxxxxxxxxxxx A.10 xxxxxxxxxxx No concrete allegation has been made in the impugned SCN to prove that any mala-fide intention to suppress the facts or evade payment of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued unabated if investigations were not carried out by the authorities. 32.5 In the instant case, the information regarding the element of short-payment of Service Tax has genesis only after the investigations of the records of the noticee by the Department and without which the short payment of Service Tax could not have been detected . I find that such acts of the noticee can be considered as acts performed with malafide intention to evade payment of Service Tax appropriately and timely. Hence, such acts are squarely covered under the elements of deliberate suppression of facts with intent to evade payment of Service Tax as stated under proviso to Section 73 (1) supra. 32.6 The suppression of facts clearly leads to the conclusion that the Noticee had intention to evade tax . This finds support from the ratio of the judgment and order delivered in the matter of Dugal Tetenal India Ltd. Vs. C.C.E reported in 2002 (147) E.L.T 578 (Tri.-Del.), wherein the Hon'ble Tribunal particularly mentioned that there was no evidence on record to show that the material fact relating to ownership of the brand name was known to the Department till their investigative results were available. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 2,40,96,546 9. Shri Shaubhik Gupta, learned counsel for the appellant made the following submissions: ( i ) The service tax demand of Rs. 2,24,43,944 out of the total disputed demand of Rs. 2,40,96,546, as confirmed in the impugned order, pertains to the financial year 2013-14. This demand is timebarred as it exceeds even the extended period of five-year limitation period stipulated under section 73(1) of the Finance Act. The five years period expired on 25.10.2018 and on 25.04.2019 for the respective half yearly periods of the Financial Year 2013-14; ( ii ) Even the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act could not have been invoked; ( iii ) The service tax on corporate guarantees could not have been confirmed in view of the decision of the Supreme Court in Commissioner of CGST and Central Excise vs. M/s. Edelweiss Financial Services Ltd [ (2023) 112 G.S.T.R. 14 (S.C.) ] ; ( iv ) The demand of service tax on advances received from customers has been erroneously calculated on the closing balance of advance received; and ( v ) The demand of service tax on legal and professional services is not justified as the demand is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect, as if, for the words thirty months , the words five years had been substituted. 14. It needs to be noted that out of the total confirmed demand of Rs. 2,40,96,546/-, the demand of Rs. 2,24,43,944/- is with respect to the Financial Year 2013-14. For the respective half yearly periods for the Financial Year 2013-14, the period of five years would expire on 25.10.2018 and 25.04.2019. The show cause notice that was issued on 11.10.2019 was clearly beyond the period of five years. The following chart would explain this: Period Due date of filing return Date up to which show cause could be served invoking extended period of limitation of five years under proviso to section 73(1) of the Act Date of issue of the show cause notice Remarks Apr 13 to Sep 13 25-Oct-2013 24-Apr-2018 11-Oct-2019 Time-Barred Oct 13 to Mar 14 25-Apr-2014 24-Apr-2019 11-Oct-2019 Time-Barred 15. The service tax demand of Rs. 2,24,43,944/- is clearly barred by limitation and, therefore, could not have been confirmed. 16. For the same reason, the demand of interest and penalty for the amount of service tax confirmed for the Financial Year 2013-14 is beyond the period of limitation. 17. The next issue that woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided, would amount to intentional suppression of facts. The Commissioner also noted that evasion of service tax would not have come to the knowledge of the department if investigation had not been carried out and, therefore, the appellant acted with mala fide intention to evade payment of service tax. The Commissioner ultimately concluded that suppression of facts clearly leads to the conclusion that the appellant had intention to evade tax. 23. It has to be remembered that mere suppression of facts is not enough. There has to be a deliberate attempt to evade payment of excise duty. The show cause notice must specifically deal with this aspect and the adjudicating authority is also obliged to examine this aspect in the light of the facts stated by the assessee in reply to the show cause notice. 24. The provisions of section 11A(4)of the Central Excise Act, which are pari materia to the provisions of section 73(1) of the Finance Act, came up for interpretation before the Supreme Court in Pushpam Pharmaceuticals Company vs . Collector of Central Excise, Bombay[ 1995 (78) E.L.T. 401 (S.C.) ] . The Supreme Court observed that section 11A(4) empowers the Department to reopen the procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to recover duties in the manner d in the proviso to Section 11-A of the Act . We are, therefore, of the firm opinion that where facts were known to both the parties, as in the instant case, it was 7 (2005) 7 SCC 749 11 E/52953/2018 not open to CEGAT to come to a conclusion that the appellant was guilty of suppression of facts. (emphasis supplied) 26. In Easland Combines, Coimbatore vs. Collector of Central Excise, Coimbatore [22. (2003) 3 SCC 410] 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. 27. The aforesaid decisions of the Supreme Court were relied upon by the Supreme Court in Uniworth Textiles Ltd . vs. Commissioner of Central Excise, Raipur [ 2013 (288) E.L.T. 161 (S.C.) ] and the relevant portion of the judgment is reproduced below: 12. We have heard both sides, Mr. R.P. Batt, lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not disclosed deliberately to escape payment of duty. 30. In M/s. Raydean Industries vs. Commissioner CGST , Jaipur [Excise Appeal No. 52480 of 2019 decided on 19.12.2022] the Tribunal in connection with the extended period of limitation, observed that even in the case of self assessment, the department can always call upon an assessee and seek information and it is the duty of the proper officer to scrutinize the correctness of the duty assessed by the assessee. The Division Bench also noted that departmental instructions issued to officers also emphasise that it is the duty of the officers to scrutinize the returns. The relevant portion of the decision is reproduced below: 24 . It would be seen that the ER-III/ER-I returns filed by the applicant clearly show that the applicant had categorically declared that it had cleared the final products by availing the exemption under the notification dated 17.03.2012. The applicant had furnished the returns on the basis of self assessment. Even in a case of self assessment, the Department can always call upon assessee and seek information . It is under sub-rule (1) of rule 6 of the Central Excise Rules, 20028 that the assessee is expected t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. The relevant portion of the judgment is reproduced below: 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 coexist. 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 selfassessment it becomes the responsibility of the assessee to determine his liability of duty correctly. This determination is required to be made on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation. 33. Even under the self-assessment scheme, the Tribunal has repeatedly held that the proper officer can always seek information from the asseessee and it is the duty of the proper officer to scrutinize the correctness of the duty assessed by the asseessee. The department cannot invoke the extended period of limitation merely because the returns were self-assessed. The Commissioner fell in error in holding that the extended period of limitation can be invoked if facts come to the notice of the department during investigation since the proper officer could have ascertained the facts. The Commissioner also fell in error in holding that suppression of facts clearly leads to the conclusion that the Noticee had intention to evade tax . This finding is clearly contrary to the decisions to the Supreme Court and the High Courts referred to above. 34. The extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act, therefore, could not have been invoked in the facts and circumstances of the case. 35. As noticed above, the only demand of service tax falling within the normal period of limitation is the service tax demand on legal services amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to another, reveal a 'provider', but also the flow of 'consideration for rendering of the service. In the absence of any of these two elements, taxability under Section 66B of Finance Act, 1994 will not arise. It is clear that there is no consideration insofar as 'corporate guarantee' issued by respondent on behalf of their subsidiary companies is concerned . 9. The reliance placed by Learned Authorised Representative on the 'nonmonetary benefits' which may, if at all, be of relevance for determination of assessable value under section 67 of Finance Act, 1994 does not extend to ascertainment of 'service' as defined in section 65B(44) of Finance Act, 1994. 'Consideration' is the recompense for the 'contractual' undertaking that authorizes levy while 'assessable value' is a determination for computing the measure of the levy and the latter must follow the former. 7. The above would suggest that this was a case where the assessee had not received any consideration while providing corporate guarantee to its group companies. No effort was made on behalf of the Revenue to assail the above finding or to demonstrate that issua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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