2026 (1) TMI 851 - AT - Service Tax

Suppression of declared taxable value in ST-3 returns found deliberate, leading to extended limitation, interest and penalty upheld

Whether taxable value was suppressed with intent to evade, attracting extended limitation and penalty: appellate fact-findings showed ST-3 returns omitted ... Demand of service tax - extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 - Suppression of facts with intent to evade payment of service tax - penalty for suppression under Section 78 of the Finance Act, 1994 - interest on confirmed demand under Section 75 of the Finance Act, 1994 - reverse charge liability on GTA services - requirement to file ST-3 returns and self assessment of service tax - production of additional evidence before Commissioner - HELD THAT:- It is settled position in law that when two authorities deciding the matter in separate proceedings record a concurrent finding of fact, then the appellate authority in second appeal, should not disturb the finding of fact till it can be shown to be perverse. Admittedly appellant has not disclose the value of the services received and provided in their ST-3 returns filed for the relevant period. They have suppressed the values of the services received and provided and had deliberately declared lower value to evade the payment of due taxes. From the ST-3 returns it is evident that the appellant was well aware of his liability to pay the service tax and the method of computation of the same. In fact it is also observed that the appellant payment of service tax during the period of dispute was not in harmony with the ST-3 return filed. Thus it is evident that appellant had deliberate intention to suppress the value in the ST-3 return to evade the payment of due service tax. No merits in the submissions made for the reason of none invocation of extended period of limitation. The clear case made out against the appellant is of suppression of taxable value in the ST-3 return with intend to evade payment of service tax. Demand of service tax confirmed for interest is also confirmed. As, upheld the demand of service tax by invoking the extended period of limitation, penalty imposed under Section 78 is also justified, in view of the decision of Hon’ble Supreme Court in the case of M/s Rajasthan Spinning & Weaving Mills Ltd. [2009 (5) TMI 15 - SUPREME COURT]. Issues: (i) Whether the demand of service tax of Rs.20,71,984/- (including interest and penalty) based on difference between values in audited financial records/ITR and ST-3 returns and made invoking the extended period of limitation (proviso to Section 73(1) of the Finance Act, 1994) is sustainable; and whether interest and penalty thereon are recoverable.Analysis: The Tribunal applied the statutory framework under the Finance Act, 1994 and Service Tax Rules, 1994, including provisions requiring assessment and filing of ST-3 returns and provisions enabling invocation of the extended five-year period where suppression with intent to evade is found. The authorities relied on audited balance sheet and ITR/third-party data showing receipts not declared in ST-3 returns, the appellant's failure to produce corroborative invoices or to rely on any permitted exception under Rule 5 of Central Excise (Appeals) Rules, 2001 for adducing new evidence, and concurrent factual findings below. The Tribunal examined applicable precedents on invocation of extended limitation and found no perversity in concurrent findings; it held the appellant's conduct and record supported a finding of deliberate suppression of taxable value, making the extended period invokable. Having upheld the demand, the Tribunal also applied the statutory provisions for levy of interest and penalty and upheld related late fee/penalty provisions for non-filing and non-cooperation.Conclusion: The demand of service tax of Rs.20,71,984/- is upheld; interest under Section 75 and penalty under Section 78 (and related late fees/penalties) are also upheld in favour of the revenue.