TaxTMI 
TaxTMI 
2024 (1) TMI 777
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....pellant from outside India, and of the countervailing duty [CVD] paid by the appellant on the goods imported by it, which are used or to be used for activities under the Concession Contract awarded to it by Delhi Metro Rail Corporation [the Delhi Metro], which is a joint venture company of the Government of India and the Government of National Capital Territory of Delhi. Another issue that would arise for consideration, if the answer to the first issue is in favour of the appellant, is whether the appellant would be entitled to refund of Rs. 65,01,43,929/- under section 142(8) of the Central Goods and Service Tax Act, 1917 [the CGST Act]. 3. The Delhi Metro implemented the "Airport Metro Express Line" Project [the Project] in New Delhi. It developed the Project by engaging a concessionaire for financing, design, procurement and installation of all systems. The bid of the consortium comprising M/s Reliance Energy Limited (now known as M/s Reliance Infrastructure Limited) and Construcciones Y Auxiliar De Ferrocarriles (CAF) S.A. with M/s Reliance Infrastructure Limited as its lead member was accepted by the Delhi Metro and a letter of acceptance dated 21.01.2008 was issued. Relian....
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....stem and technical consultancy provided from outside India and within India. The appellant had also imported goods, such as rolling stock, automatic fare collection equipment, baggage handling system, escalators, fasteners from outside India on payment of customs duty, including CVD. The appellant took the credit of the service tax and CVD paid on the said services and the imported goods in its books of account and included the details in the periodical service tax returns. 8. In the month of September 2010, an audit of the records of the appellant was conducted by the Department and the audit group observed that the availment and accumulation of CENVAT credit of service tax paid by the appellant on consulting engineer service and banking and other financial services under the reverse charge mechanism and of the CVD paid by it on the import of goods was erroneous. 9. The total CENVAT credit availed by the appellant in the books of account as on 31.03.2011 is Rs. 94,02,07,834/-. However, according to the appellant, in view of the provisions of the Credit Rules, it availed CENVAT credit of only Rs. 65,01,43,929/-. The appellant also claims that as it was providing both taxable ....
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....otice mentions that on scrutiny of the revised ST-3 returns for the period (i) October 2009 to March 2010, (ii) April 2010 to September 2010 and (iii) October 2010 to March 2011, it was observed that the appellant had availed CENVAT credit amounting to Rs. 65,01,43,929/- and the details have been summarized in Table III which is as follows: TABLE-III Particulars CENVAT credit taken on Inputs CENVAT credit taken on Capital goods CENVAT credit taken on Input Services CENVAT shown by wrong opening Balance, Closing Balance and wrong totaling CENVAT credit closing balance as on 31.03.2011 As per original ST-3 returns 32,31,15,993/- NIL 5,87,85,431/- 24,35,87,403/- 62,54,88,827/- As per revised ST-3 returns 54,05,97,026/- 1,92,00,475/- 6,42,40,058/- 2,61,06,370/- 65,01,43,929/- As per revised claim of assessee 29,95,92,447/-* 26,02,05,054/- 6,42,40,058/- 2,62,45,420/- 65,02,82,979/- *This amount includes Rs. 1,39,050/- which was debited on audit. 12. Paragraph 16.4 of the show cause notice gives reasons as to why the CENVAT credit amounting to Rs. 26,02,05,054/-, as given in Table III, taken on capital goods....
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....sible and it is reproduced below: "18.1 Whereas during the year 2009-10 the assessee had paid service Tax amounting to Rs. 3,53,94,538/- and in year 2010-11 paid the service tax amounting to Rs. 2,88,55,520/- totaling to Rs. 6,42,40,058/- as recipients of "Banking and Financial Service" and 'Consulting Engineering services' under Section 66A of the Act ibid under reverse charge mechanism. These services were used in commissioning, operation and maintenance of Airport Metro Express Line which is an exempt service. However they have claimed CENVAT credit so paid in contravention of CCR, 2004." 15. Paragraph 20 of the show cause notice gives reasons why the extended period of limitation has been invoked and it is reproduced below: "20. From the foregoing, it further appears that the assessee had intentionally and willfully suppressed the facts of availing the said inadmissible CENVAT Credit. Hence, it appears that the said amount is liable to be denied and recovered within five years from the relevant date under proviso to Section 73 (1) of the Act ibid read with Rule 14 of the CENVAT Credit Rules, 2004." 16. The appellant filed a detailed reply dated 2....
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....reported by the appellant in the ST-3 returns filed post the commencement of the audit and even after the completion of the audit. During the course of audit, all the relevant facts had been considered by the audit team and, therefore, once the Department was aware of the entire facts, the show cause notice could have been issued within the stipulated period of one year; (ii) As the entire case against the appellant is based on the amount of CENVAT credit disclosed in the ST-3 returns filed by the appellant, it cannot be alleged that the appellant had suppressed facts with an intent to evade payment of service tax; (iii) There is no finding in the impugned order demonstrating any positive evidence of intent to evade payment of service tax. On the contrary, the suo motu reversal by the appellant proves the bonafide of the appellant. In this connection, reliance has been placed on the decisions of the Supreme Court in Pahwa Chemicals Pvt. Ltd. vs. CCE, Delhi [2005 (189) ELT 257 (SC)] and Anand Nishikawa Co. Ltd. vs CCE (Appeals), Meerut [2005 (188) ELT 149 (SC)] ; (iv) In any view of the matter, the appellant had claimed CENVAT credit under a bonafide belie....
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....e extended period of limitation had been correctly invoked and in this connection placed the findings recorded by the Commissioner. 22. The submissions advanced by the learned counsel appearing for the appellant and the learned authorized representative appearing for the Department have been considered. 23. The first issue that arises for consideration is as to whether the extended period of limitation under the proviso to section 73(1) of the Finance Act could have been invoked in the facts and circumstances of the case, for if this issue is decided in favour of the appellant it would not be necessary to examine the other issues on merits. 24. In order to appreciate this issue it would be appropriate to reproduce section 73 of the Finance Act, as it stood at the relevant time. This section deals with recovery of service tax not levied or paid or short levied or short paid or erroneously refunded. It is as follows; "73(1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the service tax w....
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....w Delhi. The party deliberately availed the Cenvat credit in respect of exempted service. The case laws relied upon by the party are not applicable to the present facts & circumstances of the case as in this case it was conscious act of availing huge amount of inadmissible Cenvat credit and suppression thereof with an intent to evade payment of duty. Had the Department not conducted the audit, the inadmissible availment of such CENVAT Credit by the assessee would not have been unearthed. Hence, the assessee has suppressed the material facts intentionally from the department. Accordingly, I hold that the extended period of limitation is very well applicable in this case in terms of proviso to Section 73 (1) of the Finance Act, 1944 read with Rule 14 of the CENVAT Credit Rules, 2004 for demand and recovery of the inadmissible CENVAT Credit, and the assessee has also rendered themselves liable for penal action under Section 78 of the Act read with Rule 15 of CCR for deliberately suppressing the material facts." (emphasis supplied) 26. The contention of the learned counsel for the appellant is that the necessary ingredients for invoking the larger period of limitation contemplate....
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....credit under a bona-fide belief that it was legally entitled to claim the same and the issue involves interpretation of law. Thus, when the question involved is of legal interpretation, there cannot be any suppression or mis-statement or mala fide intention. 27. Learned authorised representative appearing for the department, however, supported the invocation of the extended period of limitation and in this connection extensively referred to the findings recorded by the Commissioner. Learned authorised representative pointed out that the appellant had deliberately availed CENVAT credit to which it was not entitled and, therefore, the appellant suppressed facts with intent to evade payment of service tax. Learned authorised representative also pointed out that these facts came to the knowledge of the department during the audit. 28. 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 n....
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....;March 2010 25th April 2010 2010-11 1 April 2010 to September 2010 25th October, 2010 2010-11 2 October 2010 to March 2011 25th April, 2011 34. The show cause notice was issued to the appellant on 20.07.2012. It was, therefore, issued beyond one year from the date of filing of the last return for the period October 2010 to March 2011 on 25.04.2011. Thus, the entire period covered by the show cause notice is beyond one year. 35. Out of the aforesaid three ST returns, the returns for the period from October 2009 to March 2010 and October 2010 to March 2011 were revised. There was, however, no revision in the return filed for the period April 2010 to September 2010. The appellant has also explained why the two returns were revised and the reasons are as follows: (i) October 2009 to March 2010 - Addition of credit of Rs. 21,74,81,033/- pertaining to inputs used in providing of services by the appellant were inadvertently not claimed earlier; (ii) October 2010 to March 2011 - Addition of credit of Rs. 2,46,55,102/- pertaining to capital goods (Rs. 1,92,00,475) and input services (Rs. 54,54,627) used in providing of s....
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....ed would not amount to suppression of facts and the relevant observations are: "17. The argument that the appellant had not disclosed in its returns that it was availing and using ineligible CENVAT credit also deserves to be rejected. The appellant cannot be faulted for not disclosing anything which it is not required to disclose. Form ST-3 in which the appellant is required to file the returns does not require details of the invoices or inputs or input services on which it availed CENVAT credit and the appellant is not required to and hence did not provide the details of the CENVAT Credit taken. It also needs to be pointed out that the Returns are filed online and therefore, it is also not possible to provide any details which are not part of the returns. If the format of ST-3 Returns is deficient in design and does not seek the details which the assessing officers may require to scrutinise them, the appellant cannot be faulted because as an assessee, the appellant neither makes the Rules nor designs the format of the Returns. So long as the assessee files the returns in the formats honestly as per its self assessment, its obligation is discharged." (emphasis supplied)....
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....nstitute suppression of facts within the proviso to Section 73(1) of the Act, unless it is, ex facie, clear that the receipt is on account of taxable services or it is unreasonable for any assessee to believe that the receipt does not fall in the net of service tax. In cases where there is a substantial dispute as to whether receipt of any amount is on account of taxable service as in the present case the non-disclosure of the same in the service tax return cannot, absent anything more, lead to the conclusion that the assessee is guilty of suppression of facts to evade tax." (emphasis supplied) 43. In view of the aforesaid facts and the decision of the Delhi High Court in Mahanagar Telephone Nigam and the decision of the Tribunal in G.D. Goenka it cannot be urged that the appellant had suppressed facts from the department. 44. Even assuming that there was suppression, it still needs to be examined whether suppression was wilful and with an intent to evade payment of service tax as 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. 45. In Pushpam Pharm....
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.... 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 omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to ....
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....th a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct." (emphasis supplied) 50. 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. xxxxxxx Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario wher....
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....s stated above, merely because MTNL had not declared the receipt of compensation as payment for taxable service does not establish that it had willfully suppressed any material fact. MTNL‟s contention that the receipt is not taxable under the Act is a substantial one. No intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return." (emphasis supplied) 52. It has, therefore, been settled by the Supreme Court and the Delhi High Court that mere suppression of facts is not enough and there must be a deliberate and wilful attempt on the part of the assessee to evade payment of service tax. In the absence of any intention to evade payment of service tax, which intention should be evident from the materials on record or from the conduct of the assessee, the extended period of limitation cannot be invoked. 53. Paragraph 20 of the show cause notice merely alleges that the appellant had consciously suppressed the fact of availing inadmissible CENVAT credit with intent to evade payment of duty. The show cause notice does not elaborate or specify the intention. The impugned order passed by the Commissioner also, after noticing that where there ....