TaxTMI 
TaxTMI 
2021 (8) TMI 642
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....services under the provisions of the CENVAT Credit Rules, 2004 [the Credit Rules]. 3. The appellant undertook certain construction projects and entered into two separate agreements with each purchaser of the flat. The first agreement was in respect of construction of the flat/unit. The second agreement was in respect of sale of land. The first agreement has been described as 'construction agreement', wherein the appellant agreed to design and promote the residential project of various apartments. The second agreement has been described as 'agreement for sale' executed between the appellant and the purchaser, wherein when the purchaser requested the vendor to convey an undivided share in the land, the title is conveyed subject to terms of the agreement. 4. According to the appellant, as the agreements involved supply of material with provision of services, it started paying service tax thereon as 'works contract service', introduced under section 65(105)(zzzza) of the Finance Act from 01.06.2007. The service tax was paid in terms of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 [the Composition Scheme ]. 5. During the period from July 2008 t....
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....rly availed on the services that. were not used in provision of any output service during period July 2008 to January 2009; (e) Penalty under Rule 15(3) of the Cenvat Credit Rules, 2004 read with section 78 of the act should not imposed for willfully contravening provisions of the CC Rules, 2004 by wrongly availing cenvat credit on services that were not used in provision of any taxable output service during period July 2008 to January 2009, with intent to evade payment of service tax; (e) Penalty for not filing the ST-3 returns covering the period July 2008 to January, 2009 with proper disclosures should not be imposed under Section 77(2) of the Finance Act, 1994." 7. The appellant submitted a reply dated 23.11.2016 to the show cause notice and denied the allegations. 8. The Commissioner, by order dated 31.03.2017, confirmed the demand and ordered for recovery of the CENVAT credit denied amounting to Rs. 2,44,48,095/- with interest and penalty under rule 15(3) of the Credit Rules, as well as imposition of penalty of Rs. 10,000/- under section 77(2) of the Finance Act. The relevant portion of the order passed by the Commissioner is reproduced below: ....
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....uld result in double-taxation at the hands of the noticee. Since the incidence of availing the Cenvat credit is appearing first, I therefore observe that the Cenvat credit availed and utilized by the noticee is liable to be disallowed and recovered under the provisions of Rule 14 of Cenvat Credit Rules, 2004. I also note that the authorized representative appearing for hearing also contended that the credit being demanded can at best be disallowed and no simultaneous recovery of the same can be made. I agree with these contentions of the noticee. ******* 8.2 I find that the extended time period of five years is invokable under the provisions contained in proviso to Section 73(1) of the Finance Act, 1994 as amended in specified cases. I find that the noticee did not pay the entire amount of Service Tax to the Govt. Exchequer ******* 8.6 l am of the view that it is possible to invoke extended period in the case of Service Tax even in situation where there is no intent to evade payment of tax. Even if it is presumed that the nottcee has not contravened any provisions with intent to evade payment of Service Tax, yet the noticee has failed to comply w....
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....017 passed by the Commissioner. 10. An application has also been filed by the Department stating therein that the pre-deposit for filing the appeal has to be made in cash only but the appellant has discharged this statutory requirement by utilizing the CENVAT credit and so the appeal should be dismissed for this reason alone. 11. Shri Narender Singhvi, learned counsel appearing for the appellant, made the following submissions: (i) The appellant discharged service tax under 'works contract service'. It is an established position of law that when an assessee has discharged its output tax liability, it will be eligible to claim CENVAT credit, irrespective of the fact that the assessee was not liable to pay such output tax at all. In this connection, reliance has been placed on the following decisions: (a) C.C.E., Bangalore-V vs. Vishal Precision Steel Tubes & Strips Pvt. Ltd. [2017 (349) E.L.T. 686 (Kar.) ]; and (b) Commissioner of Central Excise, Pune-III vs. Ajinkya Enterprises [2013 (294) E.L.T. 203 (Bom.) ]; (ii) During the period in dispute, the appellant paid service tax to the extent of Rs. 5,31,67,272/-, and availed credit of Rs. 2,44....
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....re, the appeal is liable to be dismissed on this count also; (v) The Commissioner clearly upheld the charge/allegation of the show cause notice that the noticee is required to pay service tax of Rs. 2.44 crores in cash to the government exchequer under section 73A of the Act. The Commissioner also upheld the charge of the show cause notice that CENVAT credit of Rs. 2.44 crores is recoverable under Credit Rules. Thus, there is a clear nexus and link between the demand of service tax of Rs. 2.44 crores under section 73A and demand of reversal of CENVAT credit of Rs. 2.44 crores under Credit Rules read with the proviso to section 73(1) of the Finance Act; and (vi) If the noticee had not utilized CENVAT credit Rs. 2.44 crores for payment of service tax on the output service and instead would have paid the entire tax in cash, there would have been no demand under section 73A of the Finance Act. Thus, both the demands are connected. 13. The submissions advanced by the learned counsel for the appellant and the learned Authorised Representatives appearing for the Department have been considered. 14. The first issue that arises for consideration is whether the ....
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.... should not pay amount specified in the notice. 18. The 'relevant date' has been defined in section 73 (6) of the Finance Act as follows; 73(6) For the purpose of this section, "relevant date" means,- (i) In the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short paid- (a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed; (b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder; 19. 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 int....
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.... in a situation where there is no intent to evade payment of service tax." 24. It is correct that section 73 (1) of the Finance Act does not mention that suppression of facts has to be "wilful‟ since "wilful‟ precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression "wilful" before "suppression of facts" under section 73(1) of the Finance Act, suppression of facts has still to be willful and with an intent to evade payment of service tax. The Supreme Court and the Delhi High Court have held that suppression of facts has to be "wilful‟ and there should also be an intent to evade payment of service tax. 25. Before adverting to the decisions of the Supreme Court and the Delhi High Court, it would be useful to reproduce the proviso to section 11A of Central Excise Act, 1944, as it stood when the Supreme Court explained "suppression of facts" in Pushpam Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay [1995 (78) E.L.T. 401 (SC)]. It is as follows: "11A: Where any duty of excise has not been levied or paid or has been short-levied or short-pain or erroneously refunded, by the reason of....
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....ndings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression." (emphasise supplied) 27. This decision was referred to by the Supreme Court in Anand Nishikawa Company Ltd. vs. Commissioner of Central Excise [2005 (188) E.L.T. 149 (SC)] and the observations are as follows: "26........... This Court in the case of Pushpam Pharmaceutical Company v. Collector of Central Excise, Bombay, while dealing with the meaning of the expression "suppression of facts" in proviso to Section 11A of the Act held that the term must be construed strictly. It does not mean any omission and the act must be deliberate and willful to evade payment of duty. The Court, further, held :- "In taxation, it ("suppression of facts") can have only one meaning that the correct information was not disclosed deliberately to escape payment of d....
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....limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct." (emphasis supplied) 30. The Delhi High Court in Bharat Hotels Limited vs.Commissioner of Central Excise (Adjudication)[ 2018 (12) GSTL 368 (Del.)] also examined at length the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Finance Act and held as follows; "27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word "suppression‟ in the proviso to Section 11A(1) of the Excise Act has to be read in the context of other words in the proviso, i.e. "fraud, collusion, wilful misstatement". As explained in Uniworth (supra), "misstatement or suppression of facts" does not mean any omission. It must be deliberate. In other words, there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a positive act of the assessee to avoid excise duty. x....
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.... these very words. So far as mis- statement or suppression of facts are concerned, they are clearly qualified by the word "wilful" preceding the words "mis-statement or suppression of facts" which means with intent to evade duty. The next set of words "contravention of any of the provisions of this Act or Rules" are again qualified by the immediately following words "with intent to evade payment of duty". It is, therefore, not correct to say that there can be a suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Misstatement or suppression of fact must be wilful." 32. The Commissioner, therefore, fell in error in observing that the appellant had suppressed information from the Department regarding payment of service tax by the appellant on works contract service and availment of CENVAT credit and then holding that mere suppression of facts was enough for invoking the extended period of limitation. As noticed above, even suppression of facts has to be wilful and in any case, suppression has also to be with an intent to evade payment of service tax. Though, the Commissioner in the l....