TaxTMI 
TaxTMI 
2025 (4) TMI 1115
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....provisions of section 73(3) of the Finance Act, as the appellant had made payment of service tax with interest prior to the issuance of the show cause notice. The adjudicating authority and the Commissioner (Appeals) have not denied that payment of the service tax with interest was made by the appellant before the issuance of the show cause notice, but the benefit of the provisions of section 73(3) of the Finance Act have been denied to the appellant because of the applicability of sub-section (4) of section 73 of the Finance Act, which provides that nothing contained in sub-section (3) shall apply to a case where any service tax has not been paid by reason of fraud; or collusion; or wilful mis-statement; or suppression of facts; or contravention of any of the provisions of the Chapter or of the rules made thereunder with intent to evade payment of service tax. 3. The appellant is inter alia, engaged in the generation of solar electricity in plants situated at Jodhpur in the State of Rajasthan and Lalitpur in the State of Uttar Pradesh. The appellant supplies solar power to the Governments of Rajasthan and Uttar Pradesh. 4. In the course of normal business operations, the app....
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....d payment was made by the appellant on its own volition, the appellant also requested the department to construe the letter dated 11.08.2014 as an intimation under section 73(3) of the Finance Act. 9. Subsequently letters were exchanged between the department and the appellant and simultaneously summons were also issued to the appellant under section 14 of the Central Excise Act, as made applicable to service tax matters by section 83 of the Finance Act. The appellant intimated the department that non-payment of service tax was non- deliberate and unintentional. 10. However, a show cause notice dated 31.01.2017 was issued to the appellant alleging that the services provided by foreign service providers would be leviable to service tax under "banking or other financial services", as defined under section 65(12) and made taxable under section 65(105)(zm) of the Finance Act under the reverse charge mechanism in terms of rule 3 of the Place of Provision of Service Rules, 2012 the 2012 Rules w.e.f 01 .07.2012 and rule 2(1) (d) (G) of the Service Tax Rules, 1994 the Service Tax Rules read with section 66C of the Finance Act w.e.f. 01.07.2012. It was further alleged that the appella....
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....e Act, the benefit of sub- section (3) of section 73 should be denied to the appellant. Learned counsel pointed out that the provisions of sub-section (4) of section 73 of the Finance Act would not be applicable in the present case. Learned counsel also submitted that the extended period of limitation could not have been invoked in the facts and circumstances of the case. 17. Shri Manoj Kumar, learned authorized representative appearing for the department, however, supported the impugned order passed by the Commissioner (Appeals) and contended that it does not call for any interference in this appeal. 18. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 19. In order to appreciate the contention advanced by the learned counsel for the appellant, it would be appropriate to reproduce sub- sections (3) and (4) of section 73 of the Finance Act and the relevant portions are: "73(3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom suc....
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....f said services during the period from 01.04.2010 to 31.03.2016. The amount of Service Tax at the applicable rate payable on said services has been calculated, which comes to Rs. 47,65,677/- (S. Tax: Rs. 46,26,842/- + Edu. Cess: Rs. 92,537/- + S.H.E. Cess: Rs. 46,298/-), as detailed above, xxxxxxxxxxx. However, till initiation of inquiry by DGCEI, they have not deposited any amount of Service Tax leviable on aforesaid taxable service. xxxxxxxxxxxx 15. Now, therefore, M/s. Jakson Power Pvt. Ltd, 626, 6th Floor, Tower-A, DLF Tower, Jasola, New Delhi-110076, are hereby called upon to show cause to the Assistant/Deputy Commissioner, Service Tax Division-X, Service Tax Commissionerate Delhi-II, New Delhi having his office at the office of Commissioner of Service Tax, Delhi-II situated at 37, 2nd Floor. Nehru Place, New Delhi-110019, within 30 days of the receipt of this Show Cause Notice as to why:- xxxxxxxxxx (iii) an amount of Service Tax of Rs. 47,65,677/-, deposited by them vide GAR-7 Challan No. 1360, dated 25.07.2014, should not be appropriated against the Service Tax as demanded and mentioned at (ii) above; xxxxxxxxxx (v) an a....
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.... the table placed under Para 4.2 above, it is evident that the Noticee has paid service tax amounting to Rs. 47,65,677/- along with interest of Rs. 13,98,358/- (total of Rs. 61,64,035/-) vide GAR-7 Challan No. 1360 dated 25.07.2014 under Reverse Charge Mechanism under the category of "Banking & Other Financial Services" (Annexure-B referred). It is also evident that the said payment was made within 12 days from the date of receipt of the first summon dated 07.07.2014 i.e. 30 months ahead of issuance of the impugned SCN. Further, the Noticee vide its letter dated 11.08.2014 (within 30 days from the date of receipt of the first summon dated 07.07.2014) also intimated the said payment of service tax to the Central Excise Officer in accordance with the provisions of Section 73(3) of the Act (Annexure-C referred). All the facts, stated under Para 4.1 to 4.3 above, were brought to the notice of the Department during the course of the enquiry of the case through correspondence with the Department (Annexure-D referred). Thus, there is no suppression of facts, fraud, collusion etc. on the part of the Noticee, hence, the issuance of the impugned SCN is not warranted in the present case and t....
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....ses wherein the escapement of assessment or under assessment or the Service Tax was not paid or was short paid or was erroneously refunded, due to omission or failure on the part of the party to disclose wholly and truly all material facts required for verification of the self-assessment under Section 70 of the Act ibid, the provisions of proviso to Section 73(1) of the Finance Act, 1994 as well as the provisions of Section 73(4) of the Finance Act, 1994 apply. (emphasis supplied) 26. With regard to the invocation of the extended period of limitation, the adjudicating authority observed: "22.6 In the instant case, the information regarding the element of non-payment of Service Tax by M/s Jakson under reverse charge mechanism is having genesis only after the investigations conducted by the Department and without which the short payment of Service Tax could not have been detected. Moreover, in the present case, M/s Jakson neither submitted nor placed any evidence on record that their impugned activities were in the knowledge of the Department. Thus, it is evident that M/s Jakson did not disclose the material facts by itself. 22.7 The intention to evade S....
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....tion was initiated after the intelligence had been gathered by the DGCEI about the evasion of service tax. The adjudicating authority has examined the issue in detail in the impugned order and noted that intention to evade is not required to be proved with mathematical precision as upheld by the Hon'ble Supreme Court in the case of Mallur Siddeswara Spinning Mills (P) Ltd. Vs. CCE Coimbatore [2004 (166) ELT 154 (SC)]. I observe that the appellants had been registered with Service Tax department since October 2013 and were working under the self assessment scheme. It was essential for them to work out their tax liability appropriately and pay the same as per the scheme of the Finance Act, 1994 such as in Section 68 and 70 of the said Act. In such a situation preponderance of probability favours revenue [NR Sponge Pvt. Ltd. Vs. CCE (2015 (328) ELT 453 (Tri-Del)]. Therefore, I do not agree with the contention of the appellants that provisions of Section 73(4) do not apply to their case. 15. The appellants have also submitted that they had no intention to evade payment of Service Tax as the transaction was revenue neutral since they could avail Cenvat Credit of the Service....
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....notice was issued under section 73 (1) of the Finance Act, as is clear from the first page of the notice and paragraph 11 of the show cause notice. The same are reproduced below: "F.No. DGCEI/AZU/36-86/2016-17/497 dated: 31.01.2017 To, M/s. Jakson Power Pvt. Ltd., 626, 6th Floor, Tower-A, DLF Tower, Jasola, New Delhi - 110075 DEMAND CUM SHOW CAUSE NOTICE (Under Section 73(1) of the Finance Act, 1994) xxxxxxxxxx 11. xxxxxxxx. By willful act of suppression and mis- declaration with sole intention to evade Service Tax, the extended period of five years, as provided in proviso of sub-section (1) of Section 73 of Finance Act, 1994 is invocable for demanding and recovering the Service Tax in the subject matter. Consequently, M/s. Jakson also appears to be liable to pay interest as per Section 75 of the Finance Act, 1994 for delayed payment of aforesaid amount of Service Tax." 32. Secondly, section 73(1) of the Finance Act provides for issuance of the show cause notice in a case where service tax has not been paid. An artificial distinction, without any basis, has been drawn by the adjudicating authority between ca....
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....ion (4) of section 73 of the Finance Act would not apply. This view taken by the Commissioner (Appeals) cannot be countenanced. 37. 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. 38. In Pushpam Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay 1995 (78) E.L.T. 401 (SC), the Supreme Court examined whether the department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Central Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since "suppression of facts‟ has been used in the company of strong words such as fraud, collusion, or wilful default....
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....rio where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention. ***** 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 acting under a bonafide belief." ( emphasis supplied ) 40. It would also be appropriate to refer the decision of the Delhi High Court in Mahanagar Telephone Nigam Ltd. vs. Union of India and others W. P. (C) 7542 of 2018 decided on 06.04.2023. The Delhi High Court observed that merely because MTNL had not declared the receipt of compensation as payment for taxable service, does not establish that it had wilfully suppressed any material fact. The Delhi High Court further observed that the contention of MTNL that receipt was not taxable under the Act is a substantial one and no intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return. The relevant portion of the observations are: "28. In terms of the proviso to Section 73(1) of the Act, the extended period of limitation is appl....
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....th intent to evade payment of service tax. The requirements under the proviso to section 73(1) of the Finance Act and the requirements under sub-section (4) of section 73 of the Finance Act are identical. 42. The Commissioner (Appeals), observed that investigation was initiated against the appellant on the basis of intelligence gathered by the Directorate General. The Commissioner (Appeals) also noted that intention to evade payment of service tax is not required to be proved with mathematical precision. The observations overlook the fact that mere non-payment of service tax is not sufficient for invoking the provisions of sub-section (4) of section 73 of the Finance Act for the department has to substantiate that non-payment of service tax was with an intent to evade payment of service tax. Some evidence would, therefore, have to be led by the department, though it may not be with mathematical precision. 43. What also prevailed over the Commissioner (Appeals) was the fact that the appellant was working under a self assessment scheme. According to Commissioner (Appeals) it was essential for the appellant to work out the tax liability appropriately in such a situation and pay ....
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....ons and responsibilities of Range Officers and Sector Officers". It has a table enumerating the duties, functions and responsibilities and the relevant portion of the table is reproduced below: ***** 26. The Central Excise Manual published by CBEC on May 17, 2005, which is available on the website of CBEC, devotes Part VI to SCRUTINY OF ASSESSMENT. ***** 27. It is thus evident that not only do the 2002 Rules mandate officers to scrutinise the Returns to verify the correctness of self assessment and empower the officers to call for documents and records for the purpose, Instructions issued by the department also specifically require officers at various levels to do so." (emphasis supplied) 46. 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, the Tribunal made similar observations and they are as follows: "16. Another ground for invoking extended period of limitation given in the impugned order is that the appellant was operating under self- assessment and hence had an obligation to assess service tax correctly and take o....
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....odhpur (2023) 8 Centax 209 (Tri.-Del.), the Tribunal observed that the department cannot be permitted to invoke the extended period of limitation by merely stating that it is a case of self-assessment. The relevant observations are: "20. The Department cannot be permitted to invoke the period of limitation by merely stating that it is a case of self-assessment as even in a case of self-assessment, the Department can always call upon an assessee and seek information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 2002 that the assessee is expected to self-assess the duty and sub-rule (3) of rule 12 of the Rules provides that the proper officer may, on the basis of information contained in the return filed by the assessee under sub-rule (1), and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the ass....