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TMI Blog2024 (8) TMI 1520X X X X Extracts X X X X X X X X Extracts X X X X ..... its value shall be the gross amount charged by the service provider for such service provided or to be provided by him; therefore, considering the provision of Section 67 of the Finance act and the decision of the Tribunal in the case of JMD Marketing (P) Ltd and M/S EM PEE MOTORS LTD VERSUS CCE, CHANDGIARH [2011 (8) TMI 415 - CESTAT, NEW DELHI] it is held that the appellant is liable to pay service tax on the gross commission rather than the net commission received by them, hence this issue is decided against the appellant. Extended period of limitation - HELD THAT:- The Department has been able to establish that the appellant has suppressed the material facts with intention to evade the payment of service tax because the appellant was under bonafide belief that they are liable to pay service tax on the net amount of commission received from the bank and they have been paying the service tax accordingly and have been filing service tax returns. Further it is found that the Division Bench of the Delhi Tribunal in the case of SHYAM SPECTRA PRIVATE LIMITED (FORMERLY CITYCOM NETWORK PRIVATE LIMITED) VERSUS COMMISSIONER OF SERVICE TAX, DELHI II [2024 (8) TMI 95 - CESTAT NEW DELHI] has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged that the appellants have willfully & intentionally suppressed the Gross Commission, which resulted into short payment of service tax. They also not paid service tax during the half-year ending 31.03.2005 and also failed to file ST-3 Return for this period. Also a part of value of taxable service escaped assessment by reason of willful suppression of material facts and material information with an intention to evade payment of service tax. Thus, it appears that the short paid service tax is liable to be recovered by invoking extended period of limitation. After following the due process, the adjudicating authority vide impugned order dated 30.06.2011 has confirmed the demand of service tax along with interest under section 73 and 75 of the Act by invoking extended period of limitation. He also imposed penalty equal to the amount of demand of Service tax under Section 78 and Rs. 1000/- under Section 77 of the Act. Hence, the present appeal. 3. Heard both the parties and perused the material on record. 4. Ld. Counsel for the appellant submits that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax on the amount received as commission from the banks and there was no malafied intention to evade. Ld. Counsel also submits that the impugned order has been passed in violation of principle of natural justice because the same has been passed without supplying the copies of the documents on the basis of which adverse finding has been given, in fact the appellant kept on requesting the department for supply the documents resumed by them on 20.03.2009 during the search operation but the same were not given to the appellant and the copies of the records have finally been handed on 20.09.2011, after the impugned order was passed on 30.06.2011, which has seriously caused prejudice to the appellant to defend his case properly and effectively. In support of his submissions that extended period has wrongly been invoked; the appellant has relied upon the following decisions : Dinesh Chandra Dubey Versus Commissioner of CGST, Ex & CUS, Udaipur reported as 2023(69) G.S.T.L. 297 (Tri.- Del) Continental Foundation JT. Venture Versus Commissioner of C. Ex. Chandigarh-I reported as 2007(216) E.L.T. 177(S.C.). 5. On the other hand, Ld. DR defended the impugned order and submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said service. He further submits that the contention of the appellant in reference to section 194 H of the Income Tax Act does not help them in the instant case as the provisions of the income tax Act cannot be applied for computation of taxable value for the payment of service tax. He further submits that is identical facts and circumstances, the Hon'ble CESTAT, Mumbai in case of Commissioner of Service Tax v. JMD Marketing (P) Ltd. 2016 (46) STR 504 (Tri. Mumbai) and the Hon'ble CESTAT, New Delhi in case of EM PEE Motors Ltd. v. CCE Chandigarh - 2012 (25) STR 68 (Tri.Del.), held that the assessee would be liable to pay service tax on gross amount of commission. 5.3 As regards the invocation of extended period of limitation, Ld. DR submits that the appellant has suppressed the material facts from the Department and it was only due to the internal audit of the Department that the Department came to know that the appellant was discharging service tax liability on the net amount of commission received from the service recipient. 6. We have considered the submissions made by both the parties and perused the material on record, the first issue involved in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the respondents ware required to obtain loan applications from their customers who desired to avail loans from the banks. The respondents had undertaken to process those applications and after scrutiny forward them to the bank. Admittedly for such services, they were paid commission by the bank, which was reflected in their account. Once consideration accrued to them, as against the services provided by them to the bank, by way of commission, it was hardly of any consequence how a portion of that commission, which as per the particulars provided by the Bank was given as "pay out" to assessees in respect of which even the TDS was deducted, was spent by them. If they chose to give some amount from that gross commission amount to their customers either directly or through the bank, it would not change the nature of the receipts in their hand." 8. Similarly, in the case of Em Pee Motors Ltd cited (Supra), the Tribunal has held in para 4 & 5 as under: 4. Considered arguments of both sides. It is very clear titat as per Section 67 of Finance Act, 1994 service tax shall be paid on the gross amount charged by the service provider. It is also noticed that as per the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r bonafide belief that they are liable to pay service tax on the net amount of commission received from the bank and they have been paying the service tax accordingly and have been filing service tax returns. Further we find that the Division Bench of the Delhi Tribunal in the case of Shyam Spectra Private Limited has examined the issue of limitation in detail and after considering the various decisions of the High Court and the Supreme Court, has come to the conclusion that if the ingredients of Section 73(1) are not established then the extended period of limitation cannot be invoked. The relevant findings are reproduced here in below: "13. In order to appreciate whether the extended period of limitation was correctly invoked, it would appropriate to reproduce section 73 of the Finance Act as it stood at the relevant time. This section deals with recovery of service tax not levied or paid or short levied or short paid or erroneously refunded. 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 one year from the relevant date, serve notice on the perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax, the provisions of the said section shall have effect as if, for the word "one year", the word "five years" has been substituted. 17. 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 there should also be an intent to evade payment of service tax. 18. In Pushpam Pharmaceuticals Company vs. Collector of Central Excise, Bombay 2005 (188) E.L.T. 149 (SC), the Supreme Court 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 proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it ("suppression of facts") can have only one meaning that the correct information was not disclosed deliberately to escape 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." 27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bombay [1995 Suppl. (3) SCC 462], 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 not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made herein above 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 recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ositive act of the assessee to avoid excise duty. xxxxxxxx Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention." xxxxxxxx The Revenue has not been able to prove an intention on the part of the Appellant to avoid tax by suppression of mention facts. In fact it is clear that the Appellant did not have any such intention and was acting under a bonafide belief." (emphasis supplied) 23. It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when "suppression‟ is shown to be wilful with intent to evade the payment of service tax. 24. It clearly transpires from paragraphs 11 and 12 of the show cause notice which have been reproduced above, that after mentioning that the appellant had contravened the provisions enumerated in the said paragraph, it merely mentions that by doing so the appellant had intentionally and willfully suppressed facts and did not pay the service tax; by not disclosing the entire facts to the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of 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 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-assessment it becomes the responsibilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 20028 that the assessee is expected to self-assess the duty and sub-rule (3) of rule 12 of the 2002 Rules provides that the proper officer may, on the basis of information contained in the return filed by the assessee under sub-rule (1), and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to the proper officer all the documents and records for verification as and when required by 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. 25. Departmental instructions to officers also emphasise upon the duty of officers to scrutinize the returns. The instructions issued by the Central Board of Excise & Customs on December 24, 2008 deal with "duties ..... X X X X Extracts X X X X X X X X Extracts X X X X
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