Service tax demand based on appellant's own books cannot invoke extended limitation period without suppression of facts

CESTAT Kolkata held that extended period of limitation cannot be invoked when service tax demand is raised based on appellant's own books of account. The tribunal found no suppression of facts as service tax liabilities were disclosed in balance sheets under current liabilities and statutory liabilities for the impugned period 2009-14. Since the show cause notice was issued using documents submitted by appellant and gross value of taxable services was taken from their bill statements matching balance sheet figures, there was no intent to evade tax. The demand confirmed under extended limitation period was set aside and matter remanded to adjudicating authority for calculating demand under normal 18-month limitation period from October 2012 to March 2014.

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Issues:
1. Demand of Service Tax and penalty for non-payment.
2. Contention of short payments and non-receipt of payments from clients.
3. Invocation of extended period of limitation for demand of service tax.
4. Submission of ST-3 returns and disclosure of service tax liabilities.
5. Allegation of suppression of facts and imposition of penalty.
6. Appropriation of payments made by the appellant.
7. Adjudication of the appeal and remand to the adjudicating authority.

Analysis:

Issue 1: Demand of Service Tax and penalty for non-payment
The Appellant, a registered entity providing taxable services, was investigated for alleged non-payment of Service Tax despite collecting charges from clients. A Show Cause Notice was issued demanding Service Tax for multiple financial years. The Ld. Commissioner confirmed the demand, imposed penalties, and appropriated partial payments made by the Appellant during the investigation.

Issue 2: Contention of short payments and non-receipt of payments from clients
The Appellant argued that short payments were due to non-receipt of payments from clients, leading to retention of bill amounts as "retention money." They contended that service tax liabilities were declared in statutory records and ST-3 Returns, reflecting unpaid bill amounts and liabilities in balance sheets.

Issue 3: Invocation of extended period of limitation for demand of service tax
The Appellant contested the invocation of the extended period of limitation, stating that there was no intention to evade tax. They maintained that bills were raised to clients with service tax, and liabilities were disclosed in statutory records and returns. The Appellant argued that demands should have been issued within the normal limitation period.

Issue 4: Submission of ST-3 returns and disclosure of service tax liabilities
The Appellant submitted ST-3 returns before the initiation of investigation, declaring service tax dues for specific periods. They argued that no suppression of facts occurred as liabilities were reflected in balance sheets and statutory records, indicating full disclosure of service tax liabilities.

Issue 5: Allegation of suppression of facts and imposition of penalty
The Revenue's Authorized Representative alleged insufficient disclosure in ST-3 Returns, justifying the extended period of limitation for demand confirmation and penalty imposition. However, the Tribunal found no suppression of information, citing precedents where demands based on publicly available documents were held unsustainable.

Issue 6: Appropriation of payments made by the appellant
The Tribunal remanded the matter for verification of payments made by the Appellant, directing the adjudicating authority to adjust verified payments against any confirmed duty liability for the normal limitation period.

Issue 7: Adjudication of the appeal and remand to the adjudicating authority
The Tribunal set aside the demand confirmed under the extended limitation period, holding no penalty applicable. The matter was remanded for calculating liabilities within the normal limitation period and verifying payments made by the Appellant for possible adjustment against any confirmed duty liability.

This comprehensive analysis outlines the key legal aspects and arguments presented in the judgment, addressing the issues raised by the parties and the Tribunal's decision in detail.

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