TaxTMI 
TaxTMI 
2025 (11) TMI 1880
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....truction stage itself and invites applications for allotment from interested parties. The interested parties make their applications for allotment with earnest money. After receipt of applications, the appellant processes the same and issues allotment letters to successful prospective buyers. The earnest money of unsuccessful buyers is refunded. The appellant executes a buyer agreement with the successful allottee. According to the appellant, the said buyer agreement executed by the appellant is only an agreement to sell in future and does not convey any title in property to the buyer and such title is conveyed only when the conveyance deed is entered into after completion of construction. In terms of the buyer agreement, the appellant recovers various charges from the buyer, which have been broadly divided into: (a) Basic Sale Price; (b) Preferential Location Charges; and (c) Other charges including car parking charges 3. On the amount received towards basic sale price, the appellant discharged service tax under the category of "construction of complex services" made taxable under section 65(105)(zzzh) of the Finance Act, 1994 [the Finance Act]. 4.....
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....riod of limitation was correctly invoked. 13. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 14. To appreciate this submission, it would be pertinent to refer to the relevant portion of the show cause notice dealing with the aspect of invocation of the extended period of limitation. It is reproduced below: "3. From the foregoing it appears that M/s. Omaxe Build Home Private Limited, 12, Local Shopping Centre, Kalkaji, New Delhi 110019, has contravened the following provisions of Chapter V of the Finance Act, 1994, as amended and the provisions of Service Tax Rules, 1994, as amended that the assessee failed to do self assessment of service tax on services provided by him, quantify and pay to the Government exchequer and filed proper and correct ST-3 returns in good faith in the following manner:***** 4. Whereas, it further appears that the assessee by doing so, has intentionally and willfully suppressed the facts of providing impugned taxable services and collection of impugned value of such taxable services and did not pay the Service Tax as applic....
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....rvices rendered and taxes paid by the appellant. Learned counsel, therefore, submitted that the extended period of limitation could not have been invoked to confirm the demand and impose penalty. 17. In order to appreciate the contentions that have been advanced relating to invocation of the extended period of limitation, it would be appropriate to refer to section 73 of the Finance Act, as it stood prior 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. The period involved in this appeal is from July, 2010 to June, 2012. Section 73 of the Finance Act, as it stood prior to 28.05.2012, is reproduced below: "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 six months 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 shortlevied 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....
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....cape payment of duty. The observations are as follows: "4. Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of court the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. 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 ....
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....herefore, mere failure to pay duty which is not due to fraud, collusion or wilful misstatement or suppression of facts is not sufficient to attract the extended period of limitation. 23. The aforesaid decisions of the Supreme Court were relied upon by the Supreme Court in Uniworth Textiles Ltd. vs. Commissioner of Central Excise, Raipur [2013 (288) E.L.T. 161 (S.C.)] and the relevant portion of the judgment is reproduced below: "12. We have heard both sides, Mr. R.P. Batt, learned senior counsel, appearing on behalf of the appellant, and Mr. Mukul Gupta, learned senior counsel appearing on behalf of the Revenue. We are not convinced by the reasoning of the Tribunal. The conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of nonpayment would amount to ordinary default? Construing mere nonpayment as any of the three categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in....
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....otes a positive act of the assessee to avoid excise duty. ***** 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." ***** 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) 26. 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....
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.... clear from the aforesaid discussion that the extended period of limitation can be invoked only if there is suppression of facts with intent to evade payment of service tax. It is also clear that the show cause notice must disclose material as to why there was a deliberate intent to evade payment of service tax and in the absence of such intention which is evident from the material and record or from the conduct of the assessee, the extended period of limitation under the proviso to section 73(1) of the Finance Act cannot be invoked. The extended period of limitation cannot be invoked merely because the appellant had suppressed the material facts and had contravened to provisions of the Finance Act. 28. In the present case, as can be seen from the order, a conclusion has been drawn by the Commissioner (Appeals) that there was intent to evade payment of service tax merely because the appellant had contravened the provisions of the Finance Act while filing the self assessed returns of service tax. 29. Learned counsel for the appellant also contended that the appellant bonafide believed that it was not liable to pay service tax on the parking charges and such a belief of the app....
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....ere required to be filed were indeed filed. In these returns, as we noticed earlier there was no separate column for disclosing details of the deemed export clearances. Separate disclosures were required to be made only for exports under bond and not for deemed exports, which are a class of domestic clearances, entitled to certain benefits available otherwise on exports. There was therefore nothing wrong with the assessee's action of including the value of deemed exports within the value of domestic clearances." (emphasis supplied) 31. The show cause notice also alleged that an assessee is required to correctly discharge the service tax liability in an era of self-assessment, but the appellant did not include the amount of service tax towards parking charges. 32. This approach of the Commissioner cannot be countenanced. It is the duty of the officers scrutinizing the returns to examine the information disclosed by an assessee and the department cannot be permitted to take a plea that it is the duty of the assessee to disclose correct information and it is not the duty of the officers to scrutinize the returns. 33. In this connection, reference can be made to the d....
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....nsibilities 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) 34. The view that has been taken by the Commissioner was also not accepted by the Tribunal in G.D. Goenka and the observations 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 only eligible CENVAT credit and if it does not do so, it amounts to suppression of facts with an ....
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....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 assessee and if necessary call for such records and documents from the assessee, but ....