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TMI Blog2025 (1) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - the demand for the period from April, 2011 to September, 2011 is hit by limitation as it is even beyond the period of five years. Whether the extended period of limitation could have been invoked in the facts and circumstances of the case for the period from October, 2011 to March, 2012? - HELD THAT:- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be recovered at the appropriate rate, as the case may be, on the said confirmed amount of Rs. 2,75,451/- from them under the provisions of section 75 of the chapter V of Finance Act 1994; (iii) a penalty of Rs. 2,75,451/- is imposed upon them under section 78 of the Finance Act, 1994 as discussed in foregoing paras; (iv) interest amounting to Rs. 2,963/- ordered to be recovered from them under Section 75 of the Finance Act, 1994 on the delayed payment of service tax made during the period 2011-12 to 2013-14; (v), penalty of Rs. 2000/- is imposed upon them under Section 76 of the Finance Act, 1994 for delayed payment of service tax made during the period 2011-12 to 2013-14; The show cause notice issued under F. No. V (ST) 3-333/SCN/2016-17/189 dated 03.01.2017 is disposed off accordingly." 3. The operative part of the order passed by the Commissioner (Appeals) is reproduced below: "09. In view of the above discussions and findings, the impugned Appeal No.95-ST/IND/APPL/2018 filed by the Appellant is allowed in the following terms :- (i) The Demand for Interest of Rs. 2963/- and penalty of Rs. 4000/- is upheld as confirmed by the Adjudicating Authority under the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3.1 The Noticee submits that there was true and correct disclosure regarding the taxable services in the tax returns filed and therefore it cannot be alleged that there was suppression of facts on the part of Noticee. The Service Tax Audit for the year 2011-12 was conducted by Assistant Commissioner (Audit) and issued an Audit Report No. 218/ST/12-13 dated April 16, 2013 wherein no adverse observations / remarks were made. In such circumstance extended period of limitation cannot be invoked and the impugned Show Cause Notice should be quashed and demand raised for service tax, interest and penalty therein should be set aside. 3.3.2 In this regard, the Noticee places reliance on favourable judgement in the case of Commissioner of Central Excise vs. M/s MTR Foods Limited [2011-TIOL-696-HC-KAR-CX] wherein the Hon'ble High Court of Karnataka held as under: xxx xxx xxx The Noticee places further reliance on the following judgments wherein the judicial authorities have held that the extended period of limitation cannot be invoked once the conclusive audit of the records of the assessee reveal no objections." 7. The Assistant Commissioner did not accept the plea taken by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 8,24,39,164/-. This was very much verifiable from the ST-3 returns of the Appellant, to which I find that it's a sorry state of affair on the part of the Adjudicating Authority in as much as he failed to give any speaking order on verification of the correct Assessable Value as declared in the ST-3 returns. Thus, I find that the Service Value un-reported in ST-3 returns as compared to that of Balance Sheet of the Appellant comes down to Rs. 19,54,986/-. However, I don't find any force in the Appellant contention that the said amount relates to activities not subject to Service Tax as nothing has been brought on record by the Appellant in support of their claim that the said income of Rs. 19,54,986/- was from non-taxable Services. In this regard, I find that the burden of proof is on the Appellant to prove that said amount of Rs. 19,54,986/- received by them pertain to non-taxable services, which they have failed to discharge. Accordingly, in the absence of any evidence on record that said amount is not from provision of taxable service, I hold that said amount is taxable receipt on which Service Tax due thereon is payable. 08.2 In view of above, I am of the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis supplied) 9. In is this order dated 20.08.2018 that has been assailed by the appellant in this appeal. 10. Shri Anil Bajaj, learned consultant appearing for the appellant, assisted by Shri Pratham Gamtla, apart from submitting that the demand proposed in the show cause notice could not have been made, also submitted that the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act could not have been invoked. In this connection, learned consultant pointed out that though the appellant is engaged in the business of providing coaching to students but the appellant also provided pickup and drop facility to the students by hiring buses from various independent vendors but the appellant did not charge any markup amount from the students for providing the pickup and drop facility. Learned consultant, therefore, submitted that service tax was paid by the appellant only on the coaching fees recovered from the students. Learned consultant also pointed out that an extensive audit of the appellant was conducted by the audit party under Excise Audit Manual 2000 for the financial year 2011-12 for the period from 01.04.2011 to 31.03.2012 and the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Officer may, within one year 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 rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "one year", the words "five years" had been substituted. 13. It would be seen from a perusal of sub-section (1) of section 73 of the Finance Act that where any service tax has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of limitation could have been invoked in the facts and circumstances of the case for the period from October, 2011 to March, 2012. 20. As pointed out by the appellant, an extensive audit was conducted under the Excise Audit Manual, 2000 for the financial year 2011-12 from 01.04.2011 to 31.03.2012. The records of the appellant were verified by the audit party and the appellant had also submitted the balance sheet and the trial balance through a letter dated 21.03.2013. The trial balance specifically makes a mention of the bus charges receipts of Rs. 15,92,050/-. The department was, therefore, aware of the fact that the appellant had been collecting bus charges when the audit was conducted on 11.12.2012 for the financial year 2011-12. 21. The appellant has also pointed out that the Assistant Commissioner (Audit) in his report dated 16.04.2003, found nothing objectionable regarding the bus charges. 22. Thereafter, another audit was conducted by the Central Excise Revenue Audit for the financial year 2011-12 to 2013-14. This audit was conducted in the year January, 2015. 23. It transpires that a show cause notice dated 03.01.2017 was thereafter issued to the appellant propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 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 which was suppression of facts. It is in this context that the Supreme Court observed that since "suppression of facts‟ has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. The observations are as follows: "4. Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 recover duties in the manner indicated in proviso to Section 11A of the Act." (emphasis supplied) 29. 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 are: "18. We are in complete agreement with the principal enunciated in the above decisions, in light of the proviso to section 11A of the Central Excise Act, 1944." 30. The Supreme Court in Continental Foundation Joint Venture Holding vs. Commissioner of Central Excise, Chandigarh-I [2007 (216) E.L.T. 177 (SC)] also held: "10. The expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or "collusion" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Cosmic Dye Chemical vs. CCE, Bombay [1995 (75) E.L.T. 721 (SC)], observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoked. The observations are as follows: "8. Regarding the demand for extended period, we find the reason given by the Original Authority is not legally sustainable. In fact he recorded that in terms of proviso to Section 73 of Finance Act, 1994, the intention to evade payment of duty is not required to invoke extended period or to impose penalty. We find that for invoking extended period as well as for imposing penalty under Section 78, the legal provisions are identical. The words used like fraud, collusion, willful mis-statement, suppression of fact or contravention of any provisions of Chapter V of Finance Act, 1994 or of the Rules made thereunder with intent to evade the payment of Service Tax, will show that the ingredient of mala fide is a pre-requisite to invoke both the legal provisions (proviso to Section 73 and Section 78). The Original Authority recorded that it may be true that the assessee has not contravened any provisions with intend to evade payment of service tax, however, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rve that the noticee has contravened the various provisions of Sections of Finance Act, 1994. Had the audit not been conducted of the records of the Noticee, the short payment / non-payment would have gone undetected. Therefore suppression of facts, willful mis-statement etc. with intents to evade payment of Service Tax, is rightly invoked in this case." 36. The Commissioner (Appeals) has referred to the balance sheet for the year 2011-12 in the impugned order and has noticed that if the ST-3 Returns and the balance sheet were compared, the correct sustainable value for the year 2011-12 shown in the ST-3 Returns would come to Rs. 8,31,56,164/- and not Rs. 8,24,31,164/- as noticed by the Assistant Commissioner. The Commissioner (Appeals), however, further concluded that since the appellant suppressed taxable income of Rs. 19,54,986/- by not showing the same in the ST-3 Returns, the Assistant Commissioner was justified in confirming the demand of service tax by invoking the extended period of limitation. 37. The Commissioner (Appeals) failed to notice that during the audit conducted in the year 2012, the records produced by the appellant before the audit party clearly show the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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