2025 (6) TMI 2064 - AT - Service Tax

Appeal dismissed; extended limitation period and penalty upheld where service provider filed nil ST-3 but Form 26AS showed TDS

M/s Sanjay Verma Versus Commissioner of Central Goods & Service Tax, CGST, Panchkula

CESTAT upheld invocation of the extended limitation period, finding that the registered service provider filed nil ST-3 returns while Form 26AS disclosed ... Invocation of extended period of limitation - registered service provider filed nil ST-3 returns but Form 26AS showed receipts with TDS for the relevant year - levy of penalty - suppression of facts or not - HELD THAT:- The appellant is registered with the Service Tax Department and filing their ST-3 returns regularly showing nil return. But as per Form 26AS obtained from Income Tax Department, the amount received towards the services rendered by the appellant shown as Rs. 86,21,611/-. Therefore, it is a case of suppression of facts, in that circumstances, the extended period of limitation is rightly invoked. Therefore, on limitation appellant has no case. There are no infirmity with the impugned order, the same is upheld - appeal dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether invocation of the extended period of limitation was sustainable where registered service provider filed nil ST-3 returns but Form 26AS showed receipts with TDS for the relevant year. 2. Whether penalty could be imposed in the circumstances of alleged suppression when adjudication was initiated after issuance of the show cause notice beyond one year. 3. Whether the decision relied upon by the appellant (holding adjudication bad where passed after one year of issuance of show cause notice) is applicable, in view of a subsequent higher court stay. ISSUE-WISE DETAILED ANALYSIS - 1. Validity of invoking extended period of limitation for suppression Legal framework: The extended period of limitation is available where there is suppression of facts or misstatement with intent to evade tax; regular filing of returns does not preclude initiation of proceedings if material information was concealed. Precedent Treatment: The Tribunal relied on established principles permitting extended limitation where statutory records (e.g., third-party data/Form 26AS) disclose undisclosed receipt establishing suppression; no contrary precedent was applied by the Court in this judgment. Interpretation and reasoning: The Court examined ST-3 returns (nil turnover) vis-à-vis Form 26AS showing receipts of Rs. 86,21,611 with TDS. The discrepancy constituted suppression of facts to the Department. Notices sent prior to the show cause notice went unanswered. On these facts the Court concluded suppression existed, justifying invocation of the extended period. Ratio vs. Obiter: Ratio - Where a registered service provider files nil returns but third-party tax data evidences significant receipts, such discrepancy amounts to suppression warranting invocation of the extended limitation period. The Court's factual finding that Form 26AS established suppression is central to the holding. Conclusion: The extended period of limitation was rightly invoked; the appellant's limitation plea was rejected. ISSUE-WISE DETAILED ANALYSIS - 2. Imposition of penalty in circumstances of alleged suppression and delayed adjudication Legal framework: Penalty provisions attach where there is wilful suppression or evasion; the availability of penalty typically depends on determination of liability and culpability in adjudication. Precedent Treatment: The appellant contended penalty could not be imposed; the Court did not cite a specific precedent relieving penalty where suppression is established, and treated the penalty contention as subsumed by the core finding of suppression and validity of extended limitation. Interpretation and reasoning: Having held suppression proved by mismatch between declared turnover and Form 26AS receipts, the Court found no legal basis to preclude penalty on limitation grounds. The judgment did not separately elaborate on the quantum or detailed applicability of penalty provisions but treated the penalty argument as unavailing in light of the correctness of invoking extended limitation. Ratio vs. Obiter: Ratio - If suppression justifying extended limitation is established, a plea that penalty cannot be imposed solely on account of the timing of adjudication is untenable. Obiter - Detailed analysis of penalty imposition mechanics or quantification was not undertaken. Conclusion: The contention that penalty could not be imposed was rejected insofar as it depended on the limitation challenge; the Court found no merit in the argument. ISSUE-WISE DETAILED ANALYSIS - 3. Applicability of adverse tribunal decision relied upon by appellant in light of a higher court stay Legal framework: A decision of a co-ordinate bench or tribunal may be persuasive, but its applicability can be negated or limited by subsequent orders or stays by a higher court. Precedent Treatment: The appellant relied on a tribunal decision holding adjudication bad where passed after one year of issuance of the show cause notice. The Court noted that the said decision has been stayed by the higher forum in a related matter. Interpretation and reasoning: The Court distinguished the relied-on tribunal decision on the express ground that the higher court has stayed that decision in a subsequent matter; consequently, it could not be treated as an authoritative or applicable precedent for the present facts. The Court also referred to an Apex Court proceeding staying consideration of whether adjudication passed after one year of show cause notice is invalid, thereby depriving the appellant's reliance of precedential weight. Ratio vs. Obiter: Ratio - A tribunal decision subject to a stay by a higher court cannot be relied upon as controlling precedent in later matters; reliance upon such stayed decisions is unsustainable. Obiter - The Court did not decide the substantive correctness of the stayed decision on its merits. Conclusion: The appellant's reliance on the earlier tribunal decision was rejected and distinguished because the higher court has stayed that decision; thus it was not applicable to the facts. CROSS-REFERENCES AND INTERACTION BETWEEN ISSUES 1. The determination on extended limitation (Issue 1) is foundational and disposes of the limitation-based challenge to both liability and penalty (Issue 2); the Court treated the penalty argument as subsumed under the finding of suppression. 2. The distinguishing of the relied-upon tribunal precedent (Issue 3) directly supports rejection of the appellant's argument that adjudication timing alone rendered the order invalid; therefore, Issues 1 and 3 converge to uphold the impugned order. CONCLUSIONS 1. Nil-return filings contrasted with third-party tax records evidencing receipts constituted suppression of facts, justifying invocation of the extended period of limitation. 2. The limitation challenge and associated contention against imposition of penalty lacked merit once suppression was established. 3. Reliance on a tribunal decision rendered ineffective by a higher court stay was rightly disallowed; that decision was distinguished and not applied. 4. Resultantly, no infirmity was found in the impugned order and the appeal was dismissed.