TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 995
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecovered from M/s G.D. Goenka Pvt. Ltd., N-85, Connaught Place, New Delhi-01, under Rule 14 of CENVAT Credit Rules, 2004 read with Section 73 (1) of Finance Act 1994, as amended by invoking extended period of limitation. I appropriate the confirmed demand amounting to Rs.51,44,455/- out of Rs.52,95,634/- already deposited by M/s G.D.Goenka Pvt. Ltd; (iii) I drop the demand of Service Tax amounting to Rs.1,25,429/- on wrong adjustment of excess amount paid; (iv) I order for charging and recovery of interest at appropriate rate on late payment of service tax and on Rs.51,44,455/- of Cenvat Credit due to be reversed till the date of deposit of service tax from M/s G.D.Goenka Pvt. Ltd., N-85, Connaught Place, New Delhi-01, under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994. (v) I order for recovery of interest of Rs.43,231/- for the intervening period in respect of the ineligible Cenvat Credit taken prior to the date of eligibility of Cenvat Credit from M/s G.D.Goenka Pvt. Ltd., N-85, Connaught Place, New Delhi-01, under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994; (vi) I confirm the demand of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m under the brand name of the appellant. According to the learned counsel, therefore, there is a direct nexus between the input services used to construct the school building and the taxable franchisee services provided by the appellant. 5. It is also his submission that the appellant had rented out a portion of the school building to its associate firm M/s. GD Goenka Group. This renting of immovable property was a taxable service on which the appellant paid service tax. Thus, the input services used for constructing the school building were also used by the appellant to provide renting of immovable property service to M/s G D Goenka group. 6. Learned counsel for the appellant further submits that as per Rule 6(5) of the Cenvat Credit Rules, 2004 [CCR], in respect of some input services, full credit will be available unless such services are exclusively used for providing exempted services and it is not necessary to apportion such input services as used for providing taxable and exempted services. All the input services in dispute are covered by Rule 6(5). Even though these services were also used to provide exempted service, viz., school education, since they were also used to p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o examine the merits of the case, we proceed to examine the question of limitation. The reasons for invoking extended period of limitation given in the Show Cause Notice [SCN] was that after audit, a letter dated 7.9.2012 was sent to the appellant asking it to pay the service tax short paid due to wrong availment of CENVAT credit along with interest and penalty. The appellant had deposited it but sent a letter dated 30.11.2012 contending that the amount was not deposited by it voluntarily as it was deposited without SCN and adjudication. Further, the appellant had deposited the service tax with interest, but failed to deposit the penalty and instead contested the voluntary deposit of the service tax. By doing so, according to the SCN, the appellant had intentionally and wilfully suppressed the facts of availing inadmissible CENVAT credit on the inputs which were used for non-taxable services. Thus, according to the SCN, the appellant had deposited the disputed tax and interest but not the penalty but later contested the demand itself and by doing so, the appellant had intentionally and wilfully suppressed the facts of availing inadmissible CENVAT credit. 9. The impugned orde....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... We have examined these grounds for invoking extended period of limitation. 12. Section 73 provides for recovery of service tax not levied, not paid, short levied, short paid or erroneously refunded. The provisions of this section apply mutatis mutandis to irregularly availed CENVAT credit recoverable under Rule 14 of CCR. This section permits invoking extended period of limitation to raise a demand on the following grounds: a) Fraud; or b) Collusion; or c) Wilful misstatement; or d) Suppression of facts; or e) Violation of the Act or Rules with an intent to evade payment. 13. There is no other ground on which the extended period of limitation can be invoked. Evidently, fraud, collusion, wilful misstatement and violation of Act or Rules with an intent all have the mens rea built into them and without the mens rea, they cannot be invoked. Suppression of facts has also been held through a series of judicial pronouncements to mean not mere omission but an act of suppression with an intent. In other words, without an intent being established, extended period of limitation cannot be invoked. In Pushpam pharmaceuticals company vs Collector of Central Excise Mumbai [1995 (78)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....facts. This reasoning of the Revenue cannot be accepted because there is nothing in the law which requires the assessee to accept the views of the audit or of the Revenue. There is nothing in the law by which an inference of intent to evade can be drawn if the assessee does not agree with the audit. It also does not matter if the assessee deposited the disputed amount as service tax during audit and later disputed it. Often, during audit or investigation, the assessee deposits some or all of the disputed amounts and later, on consideration or after seeking legal opinion, disputes the liability and seeks a notice or an adjudication order. This does not prove any intent to evade or deliberate or wilful suppression of facts. 16. Another ground for invoking extended period of limitation given in the impugned order is that the appellant was operating under self-assessment and hence had an obligation to assess service tax correctly and take only eligible CENVAT credit and if it does not do so, it amounts to suppression of facts with an intent to evade and violation of Act or Rules with an intent to evade. We do not find any force in this argument because every assessee operates under se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ees of MTNL that MTNL did not believe that the amount of compensation was chargeable to service tax and therefore, there was no requirement for seeking clarifications. Further, there is no provision in the Act which contemplates any procedure for seeking clarification from jurisdictional service tax authority. Clearly, the reasoning that MTNL ought to have approached the service tax authority for clarification, is fallacious." Therefore, there is no force in this ground also. 19. It has also been pointed out that but for the audit, the allegedly irregularly availed CENVAT credit would not have come to light. It is incorrect to say that but for the audit, the alleged irregular availment of CENVAT credit would not have come to light. It is undisputed that the appellant has been self-assessing service tax and filing ST-3 Returns. Unlike the officers, the assessee is not an expert in taxation and can only be expected to pay service tax and file returns as per its understanding of the law. The remedy against any potential wrong assessment of service tax by the assessee is the scrutiny of the Return and best judgment assessment by the Central Excise Officer under section 72. This secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rified by the Central Board of Excise and Customs [CBEC] in its Manual for Scrutiny of Service Tax Returns the relevant portion of which is as follows: 1.2.1A The importance of scrutiny of returns was also highlighted by Dr. Kelkar in his report on Indirect Taxation [Report of the Task Force on Indirect Taxation 2002, Central Board of Excise and Service Tax, Government of India.]. The observation made in the context of Central Excise but also found to be relevant to Service Tax is reproduced below: It is the view that assessment should be the primary function of the Central Excise Officers. Self-assessment on the part of the taxpayer is only a facility and cannot and must not be treated as a dilution of the statutory responsibility of the Central Excise Officers in ensuring correctness of duty payment. No doubt, audit and anti-evasion have their roles to play, but assessment or confirmation of assessment should remain the primary responsibility of the Central Excise Officers. (emphasis supplied) 22. Therefore, to say that had the audit not been conducted, the incorrect availment of CENVAT credit would not have come to light is neither legally correct nor is it consistent wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ne financial records for scrutinizing the return to determine the correctness of the assessments made. In pursuance of this, the Board has also issued guidelines vide letter F.No.137/27/2007 CX.4, dated 08.02.2007, which makes it mandatory to scrutinize returns on a regular basis. Details of the Board's guidelines on returns' scrutiny are discussed in Chapter 2 of this Manual. 1.2.2B The guidelines clearly envisaged that returns' scrutiny would become the core function of the Service Tax Group/Range, supervised by the Assistant Commissioner of the Service Tax Unit. 24. Thus, the CBEC took a conscious decision that detailed scrutiny of the Returns should be done only in some cases selected based on some criteria. In those Returns, where detailed scrutiny is not done by the officers some tax may escape assessment which may not be discovered within the normal period of limitation. As a matter of policy, the CBEC, took such risk and the loss of Revenue is a result of the policy. 25. To sum up: a) The appellant assessee was required to file the ST 3 Returns which it did. Unless the Central Excise officer calls for documents, etc., it is not required to provide them or disclose any....