TaxTMI 
TaxTMI 
2023 (5) TMI 657
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....viso to section 73(1) of the Finance Act, 1994 [the Finance Act]. The order also seeks to confirm the demand of CENVAT credit amounting to Rs. 12,360/- with penalty. 2. A show cause notice dated 22.10.2010 was issued to the appellant in regard to non-payment of service tax on the service provided by an 'architect' by alleging that the appellant had mis-classified the services as 'construction' services and, accordingly, taken benefit of the exemption provided under a Circular dated 17.09.2004. The show cause notice also alleged out that the appellant had provided 'management or business consultant' service, but had mis-classified it as construction service and taken benefit of the exemption Circular dated 17.09.2004. The show cause notice also alleged that the appellant had wrongly utilized CENVAT credit. 3. The appellant filed a detailed reply to the show cause notice, but the Commissioner confirmed the demand and the observations made in the order are as follows: "16.1 ***** From the above-stated statutory provisions and also the allegations made in the show cause notice, I note that the activities of the noticee include the services as providing Architectural, Eng....
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....g/structure for construction and release to site including getting approval from the client/local bodies. For these services the noticee had been charging consultancy fee from the clients which were inclusive of all the cost of manpower spent, computer, software applied, preparation of design and drawing, detailed calculations, recalculations, redesigning, all guarantees, visit to the sites, visit to Delhi office etc. It is the allegation in the show cause notice that these services did not appear to be classifiable under the service category of Construction Services, and the exemption benefit under Para 13.2 of Circular No. 90/10/2004-ST dated 17.09.2004 did not appear to be admissible to the noticee for providing such taxable services. **** ***** 16.3 I note that the show cause notice has brought on record that the noticee had entered into agreements with their various clients to provide consultancy services for preparation of project report, interaction with the local Municipal corporation, submission of preliminary cost estimates and getting necessary approval from the clients/local Municipal corporation for the proposed construction of Dental/Medical College ....
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....en invoked, it would not be necessary to examine the dispute on merits. 8. The appellant is a registered assessee and had been filing returns under section 73(6)(i) of the Finance Act. The relevant date for calculation of the limitation period is from the date on which the periodical return is to be filed. As per rule 7 of Service Tax Rules, 1994 [the Service Tax Rules], every assessee has to file a half yearly return by the 25th of the month following the particular half-year. 9. The following chart would indicate whether the entire demand deals with the extended period of limitation or portion of it deals with the normal period in respect of both the services and it is reproduced below: Demand on Services performed under Architect Services Period Normal Period of Limitation as per Section 73 Whether notice issued within normal or extended period 01.04.2005 to 30.06.2005 One year from the relevant date 25.07.2005 Extended Period 01.07.2005 to 31.12.2005 One year from the relevant date 25.01.2006 Extended Period 01.01.2006 to 30.06.2006 One year from the relevant date 25.07.2006 Extended Period 01.07.2006 to 31.12.2006 One year fro....
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....ntionally and willfully suppressed the facts of providing impugned taxable services and calculation of impugned value of such taxable services and did not pay the Service Tax as applicable on such services and wrongly availed & utilized Cenvat Credit and did not file prescribed ST-3 returns. Thus, by not disclosing the entire facts to the Department, the said value has escaped the assessment for Service Tax liability, resulting into contravention of various provisions of the said Act and the said Rules aforesaid with intention to evade payment of impugned Service Tax. The fact of rendering of these services and wrongly availing & utilizing Cenvat Credit would not have come to the notice of the department but for the audit conducted by the department. Thus, it appears that the provision of proviso to Section 73 (1) of the Act ibid can be invoked and thus, demand and recovery can be made for non-payment of Service Tax for five years from the relevant date." (emphasis supplied) 13. The order passed by the Commissioner has dealt with this issue in the following manner: "15. ****** However, in order to further examine the issue of non-payment of service tax, the dep....
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....the Apex Court, the burden was on the noticee to file a proper return or intimation with the department declaring therein the income received for rendering the above-stated two taxable services. Having failed to do so, I hold that the extended period of limitation is rightly invokable in the present case." (emphasis supplied) 14. The aforesaid show cause notice was assailed by the appellant in a writ petition before the Delhi High Court. This petition was disposed of on 24.01.2011 by the High Court with the following observations: "One of the objections raised by petitioner is in respect of Service Tax Commissioner again going into the issue of classification of the services provided by the petitioner and as to whether the petitioner is exempt from payment of service tax. This is for the period 2005-06 to 2008-09. It is only in case of fraud or suppression of material fact(s), the question of re-assessment would arise. It is the case of the petitioner that there is no suppression and the matter in controversy is only in respect of classification of the services provided by the petitioner as aforesaid. In support of his plea, learned counsel for the petitioner s....
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....ot pay the amount specified in the notice: PROVIDED that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "one year", the words "five years" had been substituted." 17. It would be seen from a perusal of sub-section (1) of section 73 of the Finance Act that where any service tax has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the service tax which has not been levied or paid, requiring him to show cause why he 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 sect....
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....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. 23. 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- (a) fraud; or (b) collusion; or (c) any wilful misstatement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act of the rules made thereunder with intent to evade payment of duty by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant dated, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice a....
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.... 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 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." 27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bombay [1995 Suppl. (3) SCC 462], we find that "suppression of facts" can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty. When facts were known to both the parties, the omiss....
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.... 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. xxxx Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention." xxxx The Revenue has not been able to prove an intention on the part of the Appellant to avoid tax by suppression of mention facts. In fact it is clear that the Appellant did not have any such intention and was acting under a bonafide belief." (emphasis supplied) 29. It would also be usefu....
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....the proviso to Section 11A. Misstatement or suppression of fact must be wilful." 30. It is, therefore, clear from the aforesaid discussion that the extended period of limitation could have been invoked only if there was suppression of facts with intent to evade payment of service tax. 31. Such being the position, the demand made for the extended period in so far as 'architect' services and 'management or business consultant' services are concerned deserves to be set aside and is set aside. 32. There is no demand for the normal period so far as 'management or business consultant' services are concerned. However, the period from 01.07.2009 to 30.03.2010 would fall within the normal period so far as architect services is concerned and, therefore, it would have to be examined whether the demand could have been confirmed under this head. 33. The Commissioner has found as a fact from the agreement that the scope of work of the appellant was confined to architecture, preparation of detail drawing and design, including structural design, calculation for proper execution of work and visit to the project site periodically. It is not possible to accept the contention of the learne....