Partial reverse charge non-payment alone does not prove suppression; extended limitation and penalty were not sustainable.

Mere non-payment of service tax under the partial reverse charge mechanism, without cogent evidence of wilful suppression, deliberate misdeclaration or actual revenue loss, was treated as insufficient to justify the extended limitation period or penalty. The dispute concerned a new reverse charge arrangement under Notification No. 30/2012, and the taxpayer discharged tax and interest after the lapse was noticed in audit. On that material, failure to comply with the mechanism alone did not establish suppression of facts in returns, so the extended period was not invocable and penalty could not be sustained.

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Issues: Whether the invocation of the extended period and confirmation of penalty for non-payment of service tax under the partial reverse charge mechanism was justified in the absence of cogent evidence of wilful suppression or deliberate misdeclaration.

Analysis: The dispute arose from non-payment of service tax under the partial reverse charge regime introduced by Notification No. 30/2012 dated 20.06.2012. The appellant discharged the tax and interest after the lapse was pointed out in audit, and the record did not show that the service provider had failed to pay the full tax component so as to establish actual revenue loss. The mere failure to comply with a new reverse charge arrangement, without more, was held insufficient to equate the conduct with suppression of facts or misstatement in returns. On the material available, the basis for invoking the extended period and sustaining penalty was not made out.

Conclusion: The extended period was not invocable and the penalty could not be sustained against the appellant.

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