TaxTMI 
TaxTMI 
2024 (12) TMI 352
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.... counsel for the appellant for setting aside the demands raised under the aforesaid three heads of service, but learned counsel for the appellant submitted that the impugned order deserves to be set aside for the sole reason that the show cause notice was issued beyond the period stipulated in the proviso to section 73(1) of the Finance Act 1994 [the Finance Act], as it stood at the relevant time. In this connection, it has been pointed out that the entire demand has been made on the basis of profit and loss account and balance sheet which are public documents known to the department and thus, there has been no suppression of facts, much less with an intent to evade payment of service. In support of this contention, learned counsel placed reliance upon certain judgments to which reference shall be made at the appropriate stage. 4. To examine the contention raised by the learned counsel for the appellant in connection with the invocation of the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act, it would be necessary to reproduce the allegations made in the show cause notice dated 12/13.03.2013 and paragraphs 11, 12, 13 and 14 of the s....
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.... present show cause notice contains was already in the knowledge of the department since very long time i.e 16.09.2003. This mention of 04.02.2008 is just to cover the period of limitation and on the face of the facts, the show cause notice is absolutely time barred and illegal. Without going into the facts of the case the show cause notice deserves to be quashed. On 16.09.03, the office of M/s Hans travel was searched by the officers of Service tax Section of Central Excise Division, Indore and all the records namely ticket book, collection sheet, tour booking, and miscellaneous files containing bus permit, ledger etc. were seized under Panchanama for further investigation about the taxable service, provided by them and the liability thereon. The said record included permit, ledger and details of bus rented to the Hans travels by the Noticee and bus plied through Hans travel on commission basis. However no case was booked, show cause issued to either M/s Hans Travels or to the Noticee. This evidently had confirmed that department had been convinced that no taxable service was provided by the Noticee on account of renting of buses. For an act which was already in the knowledge and ....
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..... Further even if it is assumed that the premises of M/s. Hans Travels was visited on 04.02.2008, as may be seen from para 2 of the instant Show Cause Notice and the documents recovered during search were verified, which cause the issue of the instant Show Cause Notice. Since then the departmental officers kept the matter unattended for more than four years. xxxxxxxxxx. Finally the instant Show Cause Notice dated 26.03.2013 has been raised on the basis of entries in the Balance Sheet after inordinate delay, despite knowing the activities of the Noticee during visit of the Central Excise officers on 04.02.2008. Law has been settled by the Apex Court and the High Court of Karnataka in the following Judgments that extended period of limitation is not invocable when the facts are within the knowledge of the department. " (emphasis supplied) 6. The Joint Commissioner examined this issue and held that the extended period of limitation was correctly invoked. The relevant observations are as follows: "30. I find that the fact about Noticee's activity of providing service would have not come to notice if the investigation against them had not been initiated by the departmen....
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....thin 5 years. I have also considered the case laws relied upon by the appellants but find that the ratios of these cases are not in conformity of the circumstances of the appellants' case." 8. In order to appreciate this contention 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 which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not 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) suppressi....
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....f facts has still to be willful and with an intent to evade payment 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. 13. 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 a....
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.... (emphasis supplied) 15. This decision was referred to by the Supreme Court in Anand Nishikawa Company Ltd. 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 discl....
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.... 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. xxxxxx 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." xxxxxx 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 acti....
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....be inferred by non-disclosure of the receipt in the service tax return." (emphasis supplied) 20. It would transpire from the aforesaid decisions 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 duty. 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. Thus, mere non disclosure of the receipts in the service tax return would not mean that there was an intent to evade payment of service tax. 21. This issue was also examined at length by this Bench in M/s G.D. Goenka Private Limited vs. The Commissioner of Central Goods and Service Tax, Delhi South [Service Tax Appeal No. 51787 of 2022 dated 21.08.2023] and after referring to the provisions of section 73 of the Finance Act, the Bench observed: "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....
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....cords, the short paying the service tax would not have come to notice. It is a matter of fact that all the details were available in the records of the appellant. The appellant was required to furnish returns under section 70 with the Superintendent of Central Excise which it did. It is for the Superintendent to scrutinize the returns and ascertain if the service tax had been paid correctly or not. If the assessee either does not make the returns under section 70 or having made a return, fails to assess the tax in accordance with the provisions of Chapter or Rules made thereunder, the Superintendent of Central Excise can make the best judgment assessment under section 72. For this purpose, he may require the assessee to produce such accounts, documents or other evidence, as he may deem necessary. Such being the legal position, if some tax has escaped assessment which came to light later during audit, all it shows is that the Superintendent of Central Excise with whom the returns were filed had either not scrutinized the returns or having scrutinized then found no error in self assessment but the audit found so much later. Had the Superintendent scrutinized the returns calling ....
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.... the High Court (Sic). 4. The appeal is dismissed. 5. Pending applications, if any, are disposed of." 25. In Commissioner of C. Ex. & Customs vs. Reliance Industries Ltd. [2023 (385) E.L.T. 481 (S.C.)], the Supreme Court held that if an assessee bonafide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be malafide. If a dispute relates to interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it is the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bona-fide manner. The relevant portion of the judgment of the Supreme Court is reproduced below: "23. We are in full agreement with the finding of the Tribunal that during the period in dispute it was holding a bona fide belief that it was correctly discharging its duty liability. The mere fact that the belief was ultimately found to be wrong by the judgment of thi....
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....assessee may genuinely believe that duty is not leviable, while the department may believe that duty is leviable. The assessee may, therefore, not pay duty in the self-assessment carried out by the assessee, but this would not mean that the assessee has wilfully suppressed facts. To invoke the extended period of limitation, atleast one of the five necessary elements must be established and their existence cannot be presumed merely because the assessee is operating under self assessment. If some duty escapes assessment, the officers of the department can always call upon the assessee to submit further documents and he may also conduct an enquiry. In fact when an audit is conducted, the officers of the audit team scrutinize the records and, therefore, notice should be issued within the stipulated time from the date the audit was conducted. Even otherwise, merely because facts came to light only during the audit does not prove that there is an intent on the part of the assessee to evade payment of duty. 28. In the present case, as noticed above, all that has been stated in the show cause notice is that the appellant received an amount for the three taxable services and since th....
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....missioner (Appeals) as to why such suppression was with an intent to evade payment of service tax. This apart, service tax has been demanded on the basis of profit and loss account and balance sheet, which are public documents which the department could have ascertained. In this connection, reference can be made to the decision of the Tribunal in Mega Trends Advertising Ltd. vs. Commr. of C. Ex. & S.T., Lucknow [2020 (38) G.S.T.L. 57 (Tri. - All.)] wherein it has been held: "6. Apart from the merits of the case, we also find that the demand is squarely barred by limitation having been raised by invoking the longer period. The Revenue has picked up the figures from the balance sheet and profit and loss account maintained by the assessee. The balance sheet and profit and loss account has been held to be public documents by various decisions and it stands concluded that when the income arising from various activities stand reflected in the said public documents, it cannot be said that there was any suppression or misstatement on the part of the assessee so as to invoke the longer period of limitation. Reference can be made to Tribunal's decision in the case of C.S.T., New....