TaxTMI 
TaxTMI 
2026 (2) TMI 12
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....and of Service Tax under the provisions of the Section 75 of the Finance Act, 1994, read with Section 174 of the CGST Act, 2017. 3. I impose a penalty of Rs. 2,04,000/- (Rupees Two Lac Four Thousand Only) under Section 78 of the "Act' read with Section 174 of CGST Act, 2017 upon the party for contravention of various provisions of the Act/Rules discussed hereinabove. 4 I impose penalty of Rs. 10,000/- [Rupees Ten Thousand only) each under the provisions of Section 77(1)(a), 77(1)(c), 77(1)(d) & 77(2) of the Finance Act, 1994, read with Section 174 of the CGST Act, 2017, upon the party for not furnishing information and produce the documents called by the Central Excise Officer. 5. I order to recover from the party, late fee at the rate of Rs.20,000/- [Rupees Twenty Thousand only] for every return not filed from FY 2016-17 under the provisions of Section 70 of the Finance Act, 1994, read with Rule 7(C) of Service Tax Rules 1994 read with Section 174 of the CGST Act, 2017, for failure to deposit the service tax on due date. However, if the Service Tax and interest is paid within a period of thirty days of the date of receipt of this order, the ....
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.... not be imposed upon them in respect of amount of service tax mentioned at S.N. (1) above under Section 78 of the 'Act' read with Section 174 of CGST Act, 2017. (iv) Penalty under Section 77(1)(a), 77(1)(b), 77(1)(c), 77(1)(d) and 77(2) of Finance Act, 1994 read with Section 174 of CGST Act, 2017 should not be imposed upon them for their various acts of omission and commission as discussed above; (v) the late fee / amount under Section 70 of Finance Act, 1994 read with Rule 7(C) of ibid and read with Section 174 of CGST Act, 2017 should not be imposed upon them for their various acts of omission and commissions discussed above;" 2.5 The said show cause notice was adjudicated as per the Order-in-Original dated 22.03.2024 referred in para-1 above. 2.6 Aggrieved appellant have filed appeal before Commissioner (Appeals) which has been dismissed as per the impugned order. 2.7 Aggrieved appellant have filed this appeal. 3.1 I have heard Ms Stuti Saggi, learned Counsel appearing for the appellant and Shri Santosh Kumar, Authorized Representative for the revenue. 4.1 I have considered the impugned orders along with the submissions made in appeal and....
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....e above I am of the considered opinion that the appellant have received Rs. 1360000/- against the sale of service. Since the specific category of service could not be established, hence the appellant would be deemed to have received consideration in lieu of taxable services provided as defined under section 65B(44) read with 65B(51) of the Act, which states that w.e.f. all services including declared services under section 66E but excluding those specified in negative list under section 66D of the Act, are leviable to service tax unless exempted by a notification issued under the Act. 5.7 Now while applying the above provisions to the facts of the instant case. I find that the appellant have provided taxable services during the period in question, If once it has been established by the department that the appellant has provided taxable services, the ones to prove that the consideration received is outside the purview of service tax entirely falls on the appellant. The appellant has failed to prove with the support of documentary evidences that the consideration received by him is exempted from service tax. I note that the case M/s Ideal Security v/s CCL Allahabad (2011 (23....
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....Act, 1994. 28. As regards the payment of interest under the provisions of Section 75 of the Finance Act, 1994, I hold that when in the foregoing discussions, the liability to pay the Service Tax has been confirmed against the party, then, there can be no immunity from, payment of appropriate interest on such Service Tax liability. I notice that it is an inbuilt provision that in the event of failure of timely payment of the tax amount into the credit of the government exchequer, the same has to be paid alongwith the interest. This view is confirmed by the Hon'ble Tribunal, Chennai in the case of INMA International Security Academy (P) Ltd. vs. CCE [2005] STR 31/2005 [(180) ELT107), wherein it has been held that "The question, now, it whether the party should be called upon to pay interest on Service Tax amount in terms of Section 75 of the Finance Act. 1994. The assessee's plea of ignorance does not appear to be appealing in as much as it is common man's knowledge that delayed payment of dues normally carry interest. The interest rightly charged in the case in terms of Section 75 ibid" Therefore, in view of the settled law, the party is requir....
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.... the defaulter shall also be liable to pay the penalty in addition to Service Tax and Interest. Thus, I hold that for this act, the party had rendered themselves liable to penal action under Section 78 of the Finance Act, 1994. 30. Further, it is evident from the facts of the case that the party failed to take the registration from the department as required under Section 69 of ibid read with Rule 4 of ibid. They did not furnish the information and produce documents called by the officer. They failed to deposit the appropriate Service Tax due within stipulated time limit, electronically, in a manner as provided under Rule 6 of Service Tax Rules, 1994. They contravened various provisions of Section 68 of the Finance Act, 1994. Thus, in view of their acts for violation of above-mentioned provisions of the Finance Act, 1994 and the Service Tax Rules, 1994, I hold that the party is liable for penal actions under Sections 77(1)(a), 77(1)(c), Section 77(1)(d) and Section 77(2) of the Finance Act, 1994. Since, it is on records that the party has violated the provisions of Section 70 of Finance Act, 1994 and Rule 7 of the Service Tax Rules, 1994, by not filing the correct....
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....ant by gauging its actions, which is an indication of one's state of mind. Black's Law Dictionary, Sixth Edition (pp 1599) defines "willful" in the following manner :- "Willful. Proceeding from a conscious motion of the will; voluntary; knowingly; deliberate. Intending the result which actually comes to pass... An act or omission is "willfully" done, if done voluntarily and intentionally and with the specific intent to do something the law forbids, or with the specific intent to fail to do something the law requires to be done..." 23. In the present case, from the evidence adduced by the appellant, one will draw an inference of bona fide conduct in favour of the appellant. The appellant laboured under the very doubt which forms the basis of the issue before us and hence, decided to address it to the concerned authority, the Development Commissioner, thus, in a sense offering its activities to assessment. The Development Commissioner answered in favour of the appellant and in its reply, even quoted a letter by the Ministry of Commerce in favour of an exemption the appellant was seeking, which anybody would have found satisfactory. Only on receiving this sa....
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....nder with intent to evade payment of duties by such person or his agent. There is no such averment to be found in the show cause notice. There is no averment that the duty of excise had been intentionally evaded or that fraud or collusion had been practiced or that the assessee was guilty of wilful misstatement or suppression of fact. In the absence of any such averments in the show-cause notice it is difficult to understand how the Revenue could sustain the notice under the proviso to Section 11-A(1) of the Act.' It was held that the show cause notice must put the assessee to notice which of the various omissions or commissions stated in the proviso is committed to extend the period from six months to five years. That unless the assessee is put to notice the assessee would have no opportunity to meet the case of the Department. It was held : "...There is considerable force in this contention. If the department proposes to invoke the proviso to Section 11A(1), the show-cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is ....
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....y the Deputy Commissioner of Central Excise, Ahmedabad-III, directing the appellant to furnish the documents relating to their activities, that the department was already aware of the nature of the appellant's operations as early as in 2013. Despite such awareness, the department issued the show cause notice after an inordinate delay, well beyond the ordinary period of limitation, and sought to justify it by invoking the extended period. 9.2 ......... 9.3. It is a settled principle of law that, for the department to invoke the extended period of limitation, there must be an active and deliberate act on the part of the assessee to evade payment of tax. Mere non-payment of tax, without any element of intent or suppression, is not sufficient to attract the extended limitation period. In this regard, reference may be made to the following judgments: (i) Padmini Products v. CCE [(1989) 4 SCC 275] "12. Shri V. Lakshmi Kumaran, learned counsel for the appellant drew our attention to the observations of this Court in CCE v. Chemphar Drugs and Liniments, Hyderabad [(1989) 2 SCC 127 : 1989 SCC (Tax) 245] where at p. 131 of the report, this Court observed t....
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....was required because the whole duty was exempt in view of Notification No.111 of 1978, referred to hereinbefore, and in view of the fact that there was scope for believing that it was exempt under Schedule annexed to the first notification i.e. No.55 of 1975, being handicrafts, the appellant could not be held to be guilty of the fact that excise duty had not been paid or short-levied or short-paid or erroneously refunded because of either any fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder. These ingredients postulate a positive act. Failure to pay duty or take out a licence is not necessarily due to fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act. Suppression of facts is not failure to disclose the legal consequences of a certain provision. Shri Ganguly, appearing for the Revenue, contended before us that the appellant should have taken out a licence under Rule 174 of the said Rules because all the goods were not handicrafts and as such were not exempted under Notification No. 55 of 1975 and therefore, the appellant were obliged to ....
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....scation of the goods. In view of the fact that the claim of the Revenue is not sustainable beyond a period of six months on the ground that these dhoop sticks, etc. were not handicrafts entitled to exemption, we set aside the order of the Tribunal and remand the matter to the Tribunal to modify the demand by confining it to the period of six months prior to issue of show-cause notice and pass consequential orders in the appeal on the question of penalty and confiscation. The appeal is allowed to the extent indicated above and the matter is, therefore, remanded to the Tribunal with the aforesaid directions. This appeal is disposed of accordingly." (ii) CCE v. Chemphar Drugs and Liniments [(1989) 2 SCC 127] "7. The respondent filed an appeal before the Tribunal. The Tribunal considered the matter and noted that the appellant's case was that the demand for duty for the period beyond six months was time-barred; and the respondent's case was that the demand for the period beyond 6 months from the receipt of show-cause notice, was time-barred inasmuch as there was no suppression or misstatement of facts by the appellant with a view to evade payment of duty. In support o....
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....x months reckoned from the date of receipt of the show-cause notice is concerned, we observe that the appellants' case is that value of the goods under T.I. 68 was not required to be included but the Revenue's plea is that only value of the specified goods under Notifications Nos. 71/78 and 80/80 was not required to be excluded." 8. On the aforesaid view the Tribunal came to the conclusion that the demand raised on this for a period beyond 6 months was not maintainable. 9. Aggrieved thereby, the Revenue has come up in appeal to this Court. In our opinion, the order of the Tribunal must be sustained. In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section (1) of Section 11-A of the Act, it has to be established that the duty of excise has not been levied or paid or shortlevied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of....
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.... 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." (iv) CCE v. Punjab Laminates (P) Ltd. [(2006) 7 SCC 431] "12. At no point of time, the Revenue doubted the correctness or otherwise of the manufacturing process or the ingredients disclosed by the respondent. The stand of the respondent that the industry as such had adopted the same manufacturing process and had been extended the benefit of the exemption notification of 1989 has not been called in question. If the stand of the manufacturer is correct, there was no reason as to why it should be singled out. 13. This Court decided Bakelite Hylam Ltd. [(1997) 10 SCC 350] on 10-3-1997. The impugned notice was issued only on 9-12-1997 evidently relying on or on the basis thereof. 14. It is not a case where the respondents had not disclosed the activities of manufacturing products carried out by them by declaration or o....
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....tion, it was for the Department to immediately take up the contention that the benefit of the notification was lost." 18. Keeping in view the peculiar facts and circumstances of this case, we are of the opinion that it is not a fit case where this Court should interfere. The appeal is, therefore, dismissed. The parties shall, however, pay and bear their own costs." 9.4. Therefore, in the absence of fraud, collusion, wilful misstatement, or suppression of facts with an intent to evade payment of service tax, the invocation of the extended period of limitation under Section 73 of the Finance Act, 1994 is wholly unwarranted. Mere nonpayment of service tax, by itself, does not justify the invocation of the extended limitation period. Accordingly, the show cause notice issued by the department is clearly time-barred. On this ground alone, the impugned order deserves to be set aside." 4.8 In view of the above, I find that demand made by invoking extended period of cannot be upheld. The impugned order is set aside. 5.1 Appeal is allowed. (Dictated and pronounced in open court) ============= Document 1 KRISHAN PAL SINGH PROFIT & LOSS ACCOUNT FOR THE YEAR END....