2023 (5) TMI 657 - AT - Service Tax

Tribunal Partially Allows Appeal: Extended Limitation Overturned, Normal Demand & CENVAT Credit Confirmed for Services.

M/s. Hospitech Management Consultants Pvt. Ltd. Versus Commissioner of Service Tax, Delhi

The Tribunal partially allowed the appeal, setting aside the demand for the extended period of limitation concerning 'architect' and 'management or ... Non-payment of service tax - architect services - management or business consultant - it is alleged that the appellant had mis-classified the services as ‘construction’ services and, accordingly, taken benefit of the exemption provided under a Circular dated 17.09.2004 - intent to evade tax or not - suppression of facts - extended period of limitation - HELD THAT:- The appellant is a registered assessee and had been filing returns under section 73(6)(i) of the Finance Act. The relevant date for calculation of the limitation period is from the date on which the periodical return is to be filed. As per rule 7 of Service Tax Rules, 1994 [the Service Tax Rules], every assessee has to file a half yearly return by the 25th of the month following the particular half-year. It would be seen that in regard to the services performed by an architect, the period from 01.04.2005 to 30.06.2009 is not within the normal period but the period from 01.07.2009 to 30.03.2010 is within the normal period. In regard to the services said to have been performed by a management or business consultant, the entire period is covered by the extended period of limitation under the proviso to section 73(1) of the Finance Act. 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 - There is substance in the contention advanced on behalf of the appellant that mere suppression of fact is not enough as it has also to be conclusively established that suppression was wilful with an intent to evade payment of service tax. In Pushpam Pharmaceuticals Company [1995 (3) TMI 100 - SUPREME COURT], 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 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. It would also be useful to refer to a decision of the Tribunal in M/S. SHIV-VANI OIL & GAS EXPLORATION SERVICES LTD. VERSUS CST, NEW DELHI [2016 (10) TMI 878 - CESTAT NEW DELHI], wherein the Tribunal after making reference to the decision of the Supreme Court in COSMIC DYE CHEMICAL VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [1994 (9) TMI 86 - SUPREME COURT], observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoked. It is, therefore, clear from the aforesaid discussion that the extended period of limitation could have been invoked only if there was suppression of facts with intent to evade payment of service tax - Such being the position, the demand made for the extended period in so far as ‘architect’ services and ‘management or business consultant’ services are concerned deserves to be set aside and is set aside. There is no demand for the normal period so far as ‘management or business consultant’ services are concerned. However, the period from 01.07.2009 to 30.03.2010 would fall within the normal period so far as architect services is concerned and, therefore, it would have to be examined whether the demand could have been confirmed under this head. It is not possible to accept the contention of the learned counsel for the appellant that the work required to be performed by the appellant would fall under ‘construction’ services as there is nothing in the agreement nor anything could be pointed out by the learned counsel appearing for the appellant that the nature of work required to be performed by the appellant would fall under ‘construction services’. It was imperative for the appellant to have led evidence to substantiate that any construction work was required to be performed by the appellant under the agreement - There is, therefore, no error in the finding recorded by the Commissioner that the appellant did not perform construction services and the work performed by the appellant would appropriately fall under the ‘architect’ services. The order passed by the Commissioner confirming the demand of service tax for the extended period of limitation in so far as the ‘architect’ services and ‘management or business consultant’ services are concerned is set aside - the demand confirmed for the normal period for architect services as also the demand for CENVAT credit is upheld - Appeal allowed in part. Issues Involved:1. Invocation of the extended period of limitation.2. Classification of services provided by the appellant.3. Confirmation of demand for CENVAT credit.Summary:1. Invocation of the Extended Period of Limitation:The primary issue was whether the extended period of limitation under the proviso to section 73(1) of the Finance Act, 1994, could be invoked. The appellant contended that the necessary ingredients for invoking the extended period, namely willful suppression of facts with intent to evade payment of service tax, did not exist. The Tribunal noted that mere suppression of facts is not enough; it must be willful and with an intent to evade payment of service tax. The Commissioner's view that the extended period could be invoked even without intent to evade was found incorrect. The Tribunal cited Supreme Court and Delhi High Court judgments emphasizing that suppression must be deliberate and with intent to evade payment of service tax. Consequently, the demand for the extended period for both 'architect' services and 'management or business consultant' services was set aside.2. Classification of Services Provided by the Appellant:The Commissioner had classified the services provided by the appellant under 'architect' services and 'management or business consultant' services, rejecting the appellant's classification under 'construction' services. The Tribunal upheld the Commissioner's finding that the appellant's work, including architectural, engineering design, and consultancy for medical colleges and hospitals, did not fall under 'construction' services but appropriately under 'architect' services. The appellant failed to provide evidence to substantiate that any construction work was performed under the agreements.3. Confirmation of Demand for CENVAT Credit:The appellant did not contest the confirmation of the demand of CENVAT credit amounting to Rs. 12,360/-. The Tribunal upheld this part of the Commissioner's order.Conclusion:The Tribunal allowed the appeal to the extent that the extended period of limitation for 'architect' services and 'management or business consultant' services was set aside. However, the demand for the normal period for 'architect' services and the demand for CENVAT credit were upheld.