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2024 (12) TMI 352
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....e advanced by Shri Ankur Upadhyay, learned 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 12/13.03.201....
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.... even before the officers of service tax and each and every fact which the 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 accou....
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.... the following cases, the demand was held to be time barred: xxxxxxxxxx 10. 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 servic....
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....2.03.2013 and covers the financial year 2008-09 to 2011-12. I find no infirmity with the issue of the demand and the period covered is well within 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 b....
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....‟ since "wilful‟ precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression "wilful" before "suppression of facts" under section 73(1) of the Finance Act, suppression of 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 ....
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.... 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) 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 no....
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.... misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct." (emphasis supplied) 18. 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. xxxxxx Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where ....
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....of compensation public by reflecting it in its final accounts as income. As 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) 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, Delh....
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....e cannot be presumed simply because the assessee is operating under self-assessment." (emphasis supplied) 22. The Tribunal in M/s. Kalya Constructions Private Limited vs. The Commissioner, Central Excise Commissionerate, Udaipur [Service Tax Appeal No. 54385 of 2015 decided on 15.11.2023] observed as follows: "11. Both the SCNs further state that had the audit not conducted scrutiny of the records, 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 ev....
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..... Civil Appeal No. 4246 of 2023 (Commissioner of CGST, Customs and Central Excise vs. Sunshine Steel Industries) filed by the department to assail the aforesaid decision of the Tribunal in Sunshine Steel Industries was dismissed by the Supreme Court on 06.07.2023 and the judgment is reproduced below: "Delay condoned. 2. Heard learned counsel for the appellant. 3. This Court is not inclined to interfere with the impugned order of 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 liabil....
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....e Revenue is solely premised on the basis that there was suppression of facts on the part of the assessee. Clearly, not producing the documents, which may be necessary for substantiating a claim, does not fall in the exception of "suppression of facts". In any view of the matter, no express allegations were made in the SCN to the said effect." 27. What, therefore, transpires from the aforesaid decisions is that there can be a difference of opinion between the department and an assessee. An 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 off....
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....ax. The Commissioner (Appeals) without were giving any reasons has found that there was no infirmity in invoking the extended period since the period was within five years. It is, therefore, clearly a case where the facts were in the knowledge of the department and the department cannot allege that facts had been suppressed. In any case, even if it is assumed that facts were suppressed by the appellant then too no reason has been assigned in the orders passed by the Joint Commissioner or the Commissioner (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 bala....