TaxTMI 
TaxTMI 
2024 (10) TMI 1465
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowing substantial questions of law were framed for being answered :- "(1) Whether in the facts and circumstances of the case, the Hon'ble Tribunal has erred in upholding invocation of extended period of limitation in terms of proviso to Section 73 of the Finance Act, 1994 when none of the ingredients stipulated therein have been satisfied? (2) Whether the Hon'ble Tribunal was right in confirming suppression for mere non-declaration of details which are not required under law to be disclosed? (3) Whether the Hon'ble Tribunal was right in holding that there is non-disclosure of the disputed receipts in their returns required to be filed under law, at least under protest, when there is no provision under law for such disclosure? (4) Whether in facts and circumstances whether the Hon'ble Tribunal was right in upholding imposition of penalties even in a case where there is no positive finding of suppression? (5) Whether in the facts and the circumstances of the case, the Hon'ble Tribunal has erred in upholding simultaneous imposition of penalties under Sections 76, 77 and 78 of the Finance Act, 1994? (6) Whether ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....its customers. 11. However, the Superintendent of Central Excise, Karur issued Letter No.303 of 2007 dated 29.06.2007 and called upon the appellant to pay service tax on several issues. In reply dated 30.07.2007 bearing reference PDD/ST/4033/2007-08, the petitioner replied the collection of penal charges were not by way of services and therefore may not attract service tax and no tax was payable on the said amount. 12. A reference was alluded to the Interactive Seminar held by the Office of the respondent on 12.08.2005 wherein the Chartered Accountant of the appellant had ostensibly raised the issue and was informed that no service tax and surcharge was payable by the appellant. 13. However, there are no records to show either the appellant's Chartered Accountant had participated in the Interactive Seminar held by 12.08.2005 or that a decision was conveyed to the effect that no service tax was payable on the penal charges. 14. After the appellant had replied on 30.07.2017, the respondent issued a Show Cause Notice dated 09.04.2008 bearing reference C.No.V/ST/15/6/2008-Cx.Adj under the proviso to Section 73(1) of the Finance Act, 1994 and proposed to levy interest un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of the Order in Original No.2/2008 was passed by the respondent is dated 19.06.2008. However, there is no discussion as to whether the aforesaid letter was indeed received by the respondent and that the Chartered Accountant concerned of the appellant had indeed participated in the Interactive Seminar held on 12.08.2005. 17. Point for consideration is whether the appellant can be fastened with a liability to pay service tax and penalty? 18. The service tax of banking and financial service was altered with effect from Finance (No.2) Act, 2004 dated 10.09.2004 by Substituting the definition of "banking and other financial services". Prior to the aforesaid period, the definition read differently. The definition as it stood prior to 10.09.2004 and with effect from 10.09.2004 are as under : - Section 65(12) prior to substitution(as it stood prior to 10.09.2004) Section 65(12) after substitution(as it stood after 10.09.2004) 12)"banking and other financial service" means- (a) the following services provided by a banking company or a financial institution including a nonbanking financial company or any other body corporate, namely:- (i) financial leasing servic....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (ix) other financial services, namely, lending, issue of pay order, demand draft, cheque, letter of credit and bill of exchange, transfer of money including telegraphic transfer, mail transfer and electronic transfer, providing bank guarantee, overdraft facility, bill discounting facility, safe deposit locker, safe vaults, operation of bank accounts;] (b)foreign exchange broking provided by a foreign exchange broker other than those covered under sub-clause (a); 19. The expression "taxable service" was defined in Section 65(105)(zm), the definition of taxable service and after in Section 65(105)(zm) read as under :- Section 65(105) prior to substitution(as it stood prior to 10.09.2004) Section 65(105) after substitution(as it stood after 10.09.2004) (zm) to a customer, by a banking company or a financial institution including a nonbanking financial company, in relation to banking and other financial services. (zm)to a customer, by a banking company or a financial institution including a nonbanking financial company, or any other body corporate or commercial concern, in relation to banking and other financial services 20. Thus, service tax came to be levied a b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....from 18.04.2006 which was in force during the period in dispute, a person who has been issued with a show cause notice under proviso to Section 73(1) of the Finance Act, 1994 on account of the short payment or short levied or short-paid or erroneously refunded, by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of Chapter-V or the rules made thereunder, with intent to evade payment of service tax, by such person or his agent, to whom a notice is served under the proviso to subsection (1) by the Central Excise Officer, such person or agent as the case may be pay service shall also tax in full or in part as may be accepted together and the interest payable thereon under Section 75 and penalty equal to twenty-five percent of the service tax specified in the notice or the service tax so accepted by such person within thirty days of the receipt of the notice. This option was also not exercised by the appellant. 27. Thus, prior to issuance of the Show Cause Notice No.C.No.V/ST/15/6/2008-Cx.Adj dated 09.04.2008, the appellant could have paid the entire amount of service tax together with interest under Section 75....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce and on the premise that retention charges were collected as penal rent and therefore the clarification is not relevant and taxation of the receipts of the aforesaid nature made by the Appellant bank in the course of provision of service of" operation of bank accounts" by its customers which is inextricably connected with the provision of banking service and is also an integral part of that. The clarification issued by the Board is binding on the department. It is not binding on the Courts as per the decision of the Hon'ble Supreme Court in Commissioner of Central Excise v. Ratan Melting & Wire Industries, (2008) 13 SCC 1. 34. We are of the view that the appellant was entitled to take a bonafide stand that no service tax was payable in the context of collection of penal charges although it could be concluded that it was liable to pay service tax. There is no record to show that failure to pay service tax was wilful and deliberate as held in Pharmaceuticals Co. v. CCE [1995 Supp (3) SCC 462. 35. The Hon'ble Supreme Court in Uniworth Textiles Ltd., vs. Commissioner of Central Excise, Raipur, (2013) 9 SCC 753, has held that if non-disclosure of certain items assessable....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Yet the surroundings 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." (emphasis supplied) 14. In Sarabhai M. Chemicals v. CCE [(2005) 2 SCC 168] a three-Judge Bench of this Court, while referring to the observations extracted above, echoed the following views: (SCC p. 181, paras 23-25) "23. Now coming to the question of limitation, at the outset, we wish to clarify that there are two concepts which are required to be kept in mind for the purposes of deciding this case. Reopening of approvals/assessments is different from raising of demand in relation to the extended period of limitation. Under Section 11-A(1) of the Central Excise Act, 1944, a proper officer can reopen the approvals/assessments in cases of escapement of duty on account of non-levy, non-payment, short-levy, short-payment or erroneous refund,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....duty. The Court further held: (SCC pp. 463-64, para 4) '4.... 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 Pushpam Pharmaceuticals Co.v.CCE[1995 Supp (3) SCC 462 : (1995) 78 ELT 401] 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 and not that he must have done, would not render it suppression. It is settled law that mere failure to declare does not amount to wilful suppression. There must be some positive act from the side of the assessee to find wilful suppression. Therefore, in view of our findings made hereinabove that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it wa....