2025 (12) TMI 517 - AT - Service Tax

Service tax recovery, interest and penalties upheld; extended limitation sustained as assessee failed to contest findings or show precedent parity

CESTAT (Allahabad) dismissed the assessee's appeal against recovery of service tax with interest and penalty for failure to obtain registration and pay ... Recovery of service tax with interest and penalty - appellant do not have any service tax registration and were not paying service tax - demand barred by time limitation - invocation of extended period of limitation - HELD THAT:- The appellant in his submissions has just placed on record certain decisions of this bench even without stating the facts and showing how these decision are applicable in their case. Such blind reliance on some decisions without showing their applicability to facts in hand do not help the case of the appellant. In case of State of Orissa vs. Md Illiyas [2005 (11) TMI 469 - SUPREME COURT] Hon’ble Supreme Court has observed that 'When the allegation is of cheating or deceiving, whether the alleged act is wilful or not depends upon the circumstances of the concerned case and there cannot be any strait jacket formula. The High Court unfortunately did not discuss the factual aspects and by merely placing reliance on earlier decision of the Court held that prerequisite conditions were absent. Reliance on the decision without looking into the factual background of the case before it is clearly impermissible.' - Impugned order clearly distinguishes the decisions that appellant relied in the appellate proceedings before the Commissioner (Appellate). In the present proceedings appellant have not stated that, the findings recorded in the impugned order on issue of limitation are erroneous, Commissioner (Appeal) has wrongly distinguished the decisions quoted by them. On the other hand they have relied upon another set of decisions to buttress their claim, without showing the applicability of these decisions to the fact of case in hand. This approach, which is contrary to the decisions of Hon’ble Supreme Court, needs to be shunned. The appellant has not challenged the impugned order stating any other ground. Appeal dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the demand of service tax for the period October 2014 to June 2017 is barred by limitation or whether the extended period under the proviso to Section 73(1) of the Finance Act, 1994 has been validly invoked. 1.2 Whether the assessee can successfully rely on cited precedents without demonstrating factual similarity and applicability to the present case, particularly in relation to limitation and suppression. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of invoking the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 2.1 Interpretation and reasoning 2.1.1 The Tribunal noted that it is an undisputed fact that the assessee was providing taxable services, receiving consideration, but had neither obtained service tax registration nor paid any service tax, nor filed service tax returns. 2.1.2 The Tribunal endorsed the findings in the impugned order that it was the statutory responsibility of the assessee to obtain registration and pay due service tax on the consideration received, and that ignorance of law is no excuse. 2.1.3 The assessee's plea that all receipts were duly recorded in the books of account and that any non-payment of tax was a bona fide mistake was rejected, the authority below having held that there was no confusion about the taxability of the services and that the assessee, being a society of ex-servicemen with access to counsel, could not claim bona fide ignorance. 2.1.4 The Commissioner (Appeal) distinguished the precedents cited before him (including cases relating to under-valuation, doubts regarding dutiability due to trade notices, and situations where the assessee was already registered and paying tax) on the footing that in those cases the assessees were registered, were paying duty/tax, or there existed genuine doubt about taxability, whereas in the present case there was complete non-registration and non-payment with no such doubt. 2.1.5 The Tribunal observed that, in the present appeal, the assessee merely cited additional decisions of the same Bench on limitation and suppression without explaining the facts of those cases or demonstrating how the ratio applied to the present factual matrix. 2.1.6 Relying upon the reasoning of the Commissioner (Appeal), the Tribunal agreed that the conduct of the assessee lacked bona fides and that there was 'not even an iota of doubt' about the taxability of the services provided; hence, the requirements for invoking the extended period (suppression and wilful default) stood satisfied. 2.2 Conclusions 2.2.1 The extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 was validly invoked in the facts of the case. 2.2.2 The demand of service tax, along with interest and penalties as determined, is not barred by limitation. Issue 2 - Permissible use of judicial precedents in support of the plea of limitation/suppression 2.3 Legal framework as discussed 2.3.1 The Tribunal referred to and applied principles laid down by the Supreme Court in several decisions (including State of Orissa v. Md. Illiyas, Manoj Bhahdur Singh, Padma Sundara Rao, Bihar School Examination Board v. Suresh Prasad Sinha, and others) on the proper use of precedents, holding that: (a) A decision is a precedent only on its own facts and is authority only for what it actually decides (ratio decidendi); (b) Courts must avoid treating judicial observations as if they were statutory text or Euclid's theorems; (c) Reliance on precedents without examining the factual background and demonstrating fit with the case at hand is impermissible; (d) Even a single significant factual difference may alter the precedential value of a decision. 2.3.2 The Tribunal highlighted the Supreme Court's exposition on 'wilful' conduct, noting that 'wilful' implies intentional, conscious, deliberate acts, excluding casual, accidental or bona fide mistakes, thereby underlining the need to examine factual circumstances when considering suppression and limitation. 2.4 Interpretation and reasoning 2.4.1 The Tribunal found that the assessee had merely placed on record a list of decisions of the same Bench, without stating the underlying facts of those cases or explaining how their ratio related to or governed the present controversy on limitation. 2.4.2 It was further noted that, similarly, before the Commissioner (Appeal) the assessee had cited various judgments, which the appellate authority had already distinguished by pointing out material factual differences (such as registration status, existence of doubt about taxability, and nature of lapses). 2.4.3 The Tribunal emphasized that this practice of 'blind reliance' on decisions, without a reasoned demonstration of factual comparability and legal relevance, is directly contrary to the principles laid down by the Supreme Court regarding precedents. 2.4.4 The Tribunal expressly held that such an approach 'needs to be shunned' and that the assessee had not shown that the findings of the Commissioner (Appeal) on limitation or on the distinction of the cited precedents were erroneous. 2.5 Conclusions 2.5.1 The precedents cited by the assessee cannot aid its case in the absence of any demonstrated factual similarity or specific application to the present dispute. 2.5.2 The findings of the Commissioner (Appeal) on limitation and on the inapplicability/distinguishability of the cited decisions stand affirmed. 2.5.3 No other substantive ground having been urged against the impugned order, the appeal was dismissed in toto.