AI Drafter 
TaxTMI 
TaxTMI 
2023 (11) TMI 100
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....e Show Cause Notice SCN dated 18.4.2017 issued by the Directorate General of Central Excise Intelligence DGCEI, Lucknow proposing recovery of service tax of Rs. 2,81,34,607/- from the assessee for the period 2010-11 to 2014-15 under section 78 of the Finance Act, 1994 Act invoking extended period of limitation along with interest under section 75. The SCN also proposed to impose penalties upon the assessee under sections 77 and 78 and late fee under section 70 of the Act. 2. The assessee is registered with the Service Tax department for providing 'Manpower supply Service' and it has been paying service tax and filing ST-3 returns. Officers of the Directorate General of Central Excise Intelligence DGCEI searched its premises on 30.3.2015 and after completing investigations, issued the aforesaid SCN. Part of the demand in the SCN was beyond even the extended period of limitation of five years, which the Commissioner dropped in the impugned order and for part of the demand, giving the benefit of reckoning the amounts received as cum tax values, the Commissioner confirmed demand of only Rs. 99,34,381/- and dropped the rest of the demand. He, however, confirmed the demand within the ....
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....me Court in UOI vs Uttam Steel 2015(319)ELT 598(SC) and it was held that' There is no doubt whatsoever that a period of limitation being procedural or adjectival law would ordinarily be retrospective in nature. This, however, is with one proviso super added which is that the claim made under the amended provision should not itself have been a dead claim in the sense that it was time barred before an Amending Act with a larger period of limitation comes into force.' Applying this ratio, the demand upto September 2014 was time barred under the old provision of 18 months on 25.4.2016. The only demand which survives is for the period 1.10.2014 to 31.3.2015 against which the assessee had deposited service tax of Rs. 50,51,636/- along with interest of Rs. 4,50,000/-. g) Penalty under section 78 should not be imposed as the elements fraud or collusion or willful mis-statement or suppression of facts or violation of the provisions of the Act or the Rules with an intent to evade payment of duty which are essential to impose the penalty under section 78 were not present. h) Penalty under section 77 (1)(c) was imposed on the assessee for failure to appear for appearance on f....
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....e of filing of the return must be considered as the relevant date and if this date is considered, the entire demand was within the extended period of five years. The demand for this period was wrongly dropped by the Commissioner. Section 73 does not make a distinction between the returns filed within time and returns filed late. 'Date of filing of return' under this section cannot be read as 'Date of filing of return when the return is filed within the period prescribed for the purpose.' The statutory provisions must be strictly interpreted. d) The demand of service tax dropped by the Commissioner in the impugned order should be confirmed along with interest. e) Penalty under section 78 may also, consequently, be increased. 7. We have considered the submissions on both sides and perused the records. The following issues fall for consideration in this case: a) Best judgment assessment invoked in the SCN and the impugned order b) What is the relevant date for reckoning the limitation under section 73 and what was the normal period of limitation? c) Invocation of extended period of limitation d) Imposition of penalties under sec....
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....s to assess the tax liability correctly. (b) To make the best judgment assessment, the Central Excise officer may ask the assessee to produce such accounts, documents or other evidence as he may deem necessary. (c) After taking into account all the relevant material which is available or which he has gathered, he can make the best judgment assessment. (d) The assessment has to be in writing. (e) Before making the judgment, the assessee must be given an opportunity of being heard. 12. Nothing in the section suggests that best judgment assessment has to be done at the request of the assessee or at the behest of anyone. The Central Excise officer, evidently, can do this on his own, in other words, suo moto. Therefore, the submission of the learned counsel for the assessee that this cannot be done suo moto holds no water. Nothing in the section says that best judgment can be resorted to only if the assessee requests for it. On the contrary, it is meant for such cases where the assessee either fails to file the return or fails to assess the tax correctly. All that is required is that it should be done in writing which requirement is met in this cas....
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....S is not a proof that service has been rendered. It is certainly proof that amounts have been paid by various persons to the assessee and that tax has been deducted from the payments. It cannot be argued that some random person made some payment to the assessee and also deducted tax so that it could be credited to the account of the assessee as tax deducted. If the persons who made the payments are the assessee's clients, it is not unreasonable to assume that the payments were for the services rendered. If it is not so, the assessee could have clarified as to why the payments were made by its clients. In the absence of any specific explanation and the evidence that amounts were paid to the assessee by its clients after deducting tax and the tax so deducted has been credited to the assessee's accounts, the obvious conclusion which one can come to is that the payments were for the services rendered. 16. It also needs to be pointed out that the demand for the normal period of limitation which the assessee has admitted and is not contesting before us is also as per the best judgment assessment, inter alia, based on the Form 26AS and other records. 17. In view of the above, we fin....
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.... filed. However, if no Return is filed, the last date for such filing the return is to be reckoned. The rationale behind this provision is self-evident. Once a return is filed with the officer, it comes within his knowledge and he can scrutinize it and raise demands from that date onwards. However, if the Return is not filed by due date, the officer need not wait endlessly and he can start action on the last date for filing the return. He can call summon or call for any documents he deems necessary and if necessary, raise a demand and take action. Evidently, if return is filed, the clock starts ticking from that date and if no return is filed, the clock starts ticking from the due date. 21. The case of the Revenue is that if the assessee files a return after the due date, such date must be reckoned as the relevant date because the section does not distinguish between the return filed by due date and return filed after due date. In our considered view, this section cannot be read in that manner. If the assessee does not file the return by the due date, the relevant date begins on the due date. Thereafter, even if the assessee files a return for that period belatedly, there is not....
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....sequences that flow from such a provision can even explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is now time to consider rules of interpretation with respect to taxation." 24. As far as the normal period of limitation is concerned, it was 18 months from the relevant date up to 13 May 2016, after which it was increased to 30 months. The question as to what would happen to the past cases when the period of limitation is increased was answered by the Supreme Court in Uttam Steel. It was held that limitation being a procedural law will have retrospective effect but any case which has already lapsed on the date the amendment came into force will not revive. The amendment will not put life into dead cases but those which are still live on the date of amendment will be governed by the new limitation. Paragraph 10 of the judgment reads as follows: "10. We have heard learned counsel for the parties and Shri Bagaria, the learned Amicus Curiae at some length. There is no doubt whatsoever that a period of limitation being procedural or adjectival law would ordinarily be retrospective in nature. This, how....
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....he assessment was barred under the old Act at the date when the new Act came into force. It follows therefore that the notices dated 13-11-1963 and 9-1-1964 issued by the Income Tax Officer, Ahmedabad were illegal and ultra vires and were rightly quashed by the Gujarat High Court by the grant of a writ." In New India Insurance Co. Ltd. v. Shanti Misra, (1975) 2 SCC 840, this Court said: "The new law of limitation providing a longer period cannot revive a dead remedy. Nor can it suddenly extinguish vested right of action by providing for a shorter period of limitation." Similarly in T. Kaliamurthi v. Five Gori Thaikkal Wakf, (2008) 9 SCC 306, this Court said: "40. In this background, let us now see whether this section has any retrospective effect. It is well settled that no statute shall be construed to have a retrospective operation until its language is such that would require such conclusion. The exception to this rule is enactments dealing with procedure. This would mean that the law of limitation, being a procedural law, is retrospective in operation in the sense that it will also apply to proceedings pending at the time of the enactment as ....
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....artment not initiated the enquiry against M/S RRMS, the facts of suppression of taxable value and evasion of Service Tax would not have been unearthed. Therefore, service tax amounting to Rs. 2,81,34,607/-(including Education Cess and Higher Secondary Education Cess) for the period from 2010-11 to 2014-15 appears to demandable and recoverable from M/s RRMS by invoking the extended period of limitation under the proviso to sub-section (1) of Section 73 of the Finance Act, 1994 along with interest thereon under Section 75 of the Act, ibid." 28. The reasons for invoking extended period of limitation given in the impugned order is as follows: "6.21 Now I take up the point whether the proviso invoking the extended period of time for demanding the service tax for the disputed period as laid down under Section 73(1) is applicable in this case. I found that in the present case party has suppressed value of taxable services in their ST-3 returns, failed to pay service tax charged and collected from their customers in government exchequer, not co-operated with the investigation carried out by the DGCEI, failed to submit actual value of taxable value realized by them before the in....
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.... bribes and hence it stopped cooperating and instead complained to the CBI who filed a First Information Report against the officers a copy of which is enclosed with this appeal. The case of the Revenue regarding the audit conducted previously is that though the audit was conducted, the audit could not detect the evasion which was unearthed by the officers of DGCEI much later. After considering the above submissions of both sides and the factual matrix, we are of the considered view that the department has not made out a case to invoke extended period of limitation in the matter. While it is true that the DGCEI discovered that some tax had escaped assessment and that the assessee does not dispute it on merits, it is equally true that the entire demand is based on the records of the assessee, some of which it produced and the other records which the DGCEI could obtain through the Income Tax department. Such a scrutiny could have been and should have been done by the Range officer with whom the Returns were filed and he was fully competent to call for any records from the assessee. Such scrutiny could also have been done by the audit team which audited its records. What is evident is....
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....the department and hence he did not provide them. He, however, admits that the invoices were not provided by it despite being asked because, 'they were bulky'. It is also the submission of the learned counsel for the assessee that in any case, the amount of penalty under this section cannot exceed Rs. 10,000/- 33. None of the submissions of the assessee can be a defence to not appear in response to summons and not produce the relevant documents. In particular, the invoices are the basic documents which show the value of services rendered by the assessee. The ST-3 Returns only require the aggregate values of the taxable services rendered, tax paid, etc. If these are to be verified, invoices are required. There is no justification for the assessee to have not submitted the invoices. It is for this reason, the SCN was issued based on Form 26AS of the assessee obtained from the Income Tax department which shows how much was paid by various clients to the assessee. The assertion of the learned counsel that the penalty under this section cannot exceed Rs. 10,000/- is also not correct. He has completely mis-read the section which provides for penalty of Rs. 10,000/- or Rs.200/- per day....