TaxTMI 
TaxTMI 
2026 (2) TMI 11
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....of the Finance Act, 1994 read with Section 66B of the Act. 2.2 On the basis of information received from the Income Tax Department for the Financial Year 2014-15 it was observed that appellant had short paid service tax as detailed in table below:- Financial Year Gross Value of Service receipts Service Tax (incl Cess) ITR ST-3 Difference @ % Demanded 2014-15 1674160 -303667 1370493 12.36 169393 2.3 Appellant vide letters dated 07.12.2020 and 13.08.2021 was asked to furnish details of payment of service tax along with ST-3 returns and reason of differences in value as shown in service tax return and income tax return. However, no reply was received from the party. 2.4 Alleging suppression, a show cause notice dated 24.12.2020 was issued to the appellant asking them to show cause as to why:- "(i) The Service Tax amounting to Rs.169393/ should not be demanded and recovered from them under proviso to Section 73(1) of the Act, 1994 read with Section 142, Section 173 and Section 174 of CGST Act, 2017. (ii) The due interest on the amount of Service Tax mentioned at (i) above should not be demanded and recovered ....
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....1 I have considered the impugned orders along with the submissions made in appeal and during the course of argument. 4.2 Impugned order records the findings as follows:- "6.2 Now I move to discuss the facts of the case. I observe that the appellant as sole proprietorship was registered with the Department having Service Tax Registration No. AADPV4501CSD002 for providing taxable services in terms of the provisions of the Finance Act, 1994. Further, as regard to discussing the case on merit, I find that based on data received from the Income Tax Department for the Financial Year 2014-15, the appellant was issued a SCN No. 390/AC/ST/Div-II/Noida/2020 dated 24.12.2020 for not discharging their Service Tax liability amounting to Rs.1,69,393/-on the differential value of Rs.13,70,493/- between ITR return and Service Tax Return (ST-3). However, the appellant was asked for their clarifications in this regard but no reply was submitted. Thereafter, the Assistant Commissioner, CGST Division-II, Noida (the adjudicating authority) observed the issue on the basis of the written submissions made by the appellant as well as the allegations leveled in the SCN and found the appellant....
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....taxable service and the appellant is liable to discharge service tax thereon, if any. 6.5 Now, I take up the 2nd issue wherein the appellant is pleading that while filing the ITR, the figure was mentioned as per accrual basis/mercantile accounting system basis whereas this amount is not received in their bank account in the same financial year and even in succeeding financial year. Here, in support of their arguments they submitted copies of the following documents as their additional submissions along with a write-up dated 08.04.2025:- (i) Bank Statement issued by the Oriental Bank of Commerce, Chawri Bazar, Delhi for A/C No. 00151010017230 for the period of August, 2014 to March, 2016 for the bank account in the name of Anil Raghuvanshi & Associates, 5/2860, Chuna Mandi, Pahar Ganj, New Delhi (i.e. not pertaining to M/s Anil Singh Verma, the appellant). (ii) Service Tax registration (ST-2) Certificate having No. AADPV4501CST001 issued on 13.04.2009 in the name of Anil Raghuvanshi & Associates, 5/2860, Chuna Mandi, Pahar Ganj, New Delhi (i.e. not pertaining to M/s Anil Singh Verma, the appellant having Service Tax Registration No. AADPV4501CSD002). ....
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.... impugned 010 is justifiable on merit or not. In this regard, I observe that in absence of any reply from the appellant vide para 06 of the impugned OIO, the adjudicating authority having relied on the data received from the Income Tax Department found the differential taxable value of services in the total amount paid/credited under 194C, 194H, 1941, 194J/ sale of service shown in ITR and the gross amount in ST-3 returns and hence he confirmed the said demand just on the ground that the total sale of service shown in ITR for the previous Financial Year 2013-14 was beyond the threshold exemption limit of Rs.10.00 Lakhs vide para 12 of the impugned OIO. In counter of this, the appellant argues that only proposed services bills have been raised for the amount mentioned in the ITR for the relevant financial year but while filing the ITR, the amount declared in the ITR is on accrual basis as per mercantile accounting system whereas no corresponding receipt has been realized in the relevant or subsequent financial year, which is proved as evidence in their bank account. Hence, no service tax liability arises in terms of Rule 6(1) of the Service Tax Rules, 1994. Further, the appellant ar....
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....ty in para nos. 6 & 12 of the impugned OIO as well as submissions made by the appellant as discussed supra, I am of the opinion that the impugned OIO is found to be proper and legal in terms of value of services established, tax liability, applicability of extended period and application of penal provisions and the appellant's submissions, pleas and arguments are not sustainable at this cost." 4.3 I find that though the demand has been made by invoking the extended period of limitation, neither the impugned order nor the Order-in-Original records any findings in respect of the same. 4.4 Further the Order-in-Original records the findings as follows:- "11 I have carefully gone through the records of the case on file case allegation, levelled in the show cause notice dated 24.12.2020. The issue in brief is that based on the data received from CBDT, it was observed that the party was registered with the department Vide Service tax registration no. AADPV4501CSD002 but not discharged due and proper service tax of Rs.1.69.393/- during 201415 on the value of the consideration received towards sale of service. The instant notice was issued to the party proposing the deman....
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.... of service tax. Impugned order rejects the same in subsequent paragraphs. However, I find that appellant on the basis of above entertained a belief that he was not required to pay service tax in respect of these services. Even if Notification No.25/2006-ST dated 13.07.2006 was rescinded by Notification No.32/2011-ST dated 25.04.2011 the fact that appellant even otherwise the another facts has been recorded in para 6.5 of that order with records to surrender of ST-2 Certificate dated 28.09.2011 along with ACES status of Surrender request pending with the Department. I find that even when appellant had made a request for surrender and the department failed to act on the same either by accepting or by rejecting the said surrender. There is enough evidence to show that all the facts in respect of services being provided by the appellant was well within the knowledge of the Department and they failed to act upon the same. In such a situation, where appellant entertained a bonafide belief and all the facts were well within the knowledge of the department invocation of extended period of limitation for making this demand cannot be justified. Reliance is placed on the decision of Hon'ble ....
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....the bona fide conduct of the appellant. It still reflects the fact that the appellant made efforts in pursuit of adherence to the law rather than its breach. 24. Further, we are not convinced with the finding of the Tribunal which placed the onus of providing evidence in support of bona fide conduct, by observing that "the appellants had not brought anything on record" to prove their claim of bona fide conduct, on the appellant. It is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. This Court observed in Union of India v. Ashok Kumar & Ors. - (2005) 8 SCC 760 that "it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility." 25. Moreover, this Court, through a catena of decisions, has held that the proviso to Section 28 of the Act finds application only when specific and explicit averments challenging the fides of the conduct of the assessee are made in the show cause notice, a requireme....
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....-cause notice which is the allegation against the assessee falling within the four corners of the said proviso...." (Emphasis supplied) 26. Hence, on account of the fact that the burden of proof of proving mala fide conduct under the proviso to Section 28 of the Act lies with the Revenue; that in furtherance of the same, no specific averments find a mention in the show cause notice which is a mandatory requirement for commencement of action under the said proviso; and that nothing on record displays a willful default on the part of the appellant, we hold that the extended period of limitation under the said provision could not be invoked against the appellant." 4.7 In the following decisions also it has been held that extended period of limitation could not have been invoked for making the demand when the person entertained a bonafide belief about non taxable nature or exempted nature of the services provided. ⮚ Anand Nishikawa Co. Ltd. Vs CCE, Meerut 2025 (188) ELT 149; ⮚ Infinity Infotech Parks Ltd. Vs UOI 2014 (36) STR 37; ⮚ CCE, Chennai Vs Chennai Petroleum Corporation Ltd. 2007 (211) ELT 193; 4.8 I observe tha....
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....evied 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. It was observed by this Court that something positive other than mere inaction or failure on the part of the manufacturer or producer of conscious or deliberate withholding of information when the manufacturer knew otherwise, is required to be established before it is saddled with any liability beyond the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. The Tribunal, however, had held contrary to the contention of the appellant. The Tribunal noted that dhoop sticks are different products from agarbatis even though they belonged to the same category and the Tribunal was of the view that these were to be treated differently. Therefore, the clarification given in the context of the agarbatis could not be applicable to dh....
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....We are unable to accept this position canvassed on behalf of the Revenue. As mentioned hereinbefore, mere failure or negligence on the part of the producer or manufacturer either not to take out a licence in case where there was scope for doubt as to whether licence was required to be taken out or where there was scope for doubt whether goods were dutiable or not, would not attract Section 11-A of the Act. In the facts and circumstances of this case, there were materials, as indicated to suggest that there was scope for confusion and the appellant believing that the goods came within the purview of the concept of handicrafts and as such were exempt. If there was scope for such a belief or opinion, then failure either to take out a licence or to pay duty on that behalf, when there was no contrary evidence that the producer or the manufacturer knew these were excisable or required to be licensed, would not attract the penal provisions of Section 11-A of the Act. If the facts are otherwise, then the position would be different. It is true that the Tribunal has come to a conclusion that there was failure in terms of Section 11-A of the Act. Section 35-L of the Act, inter alia, provides....
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....vious goods manufactured by the respondent. The plea of the Revenue was that there was suppression and/or mis-declaration and/or wrong information furnished in the declaration itself. The Tribunal noted the facts as follows: "We observe it is not denied by the Revenue that the appellants had been submitting their classification lists from time to time showing the various products manufactured by them including those falling under T.I. 14-E and 68 also these containing alcohol. The officers who visited the factory as seen from the survey register at the factory also took note of the various products being manufactured by the appellants. It cannot be said that the appellants had held back any information in regard to the range and the nature of the goods manufactured by them. The appellants have maintained that the value of the exempted goods under T.I. 68 and also value of medicines containing alcohol, according to their interpretation, were not required to be included for the purpose of reckoning of the total excisable goods cleared by them. There is nothing on record to show that the appellants non-bonafidely held back information about the total value of the goods cleare....
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....mstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. The Tribunal came to the conclusion that the facts referred to hereinbefore do not warrant any inference of fraud. The assessee declared the goods on the basis of their belief of the interpretation of the provisions of the law that the exempted goods were not required to be included and these did not include the value of the exempted goods which they manufactured at the relevant time. The Tribunal found that explanation was plausible, and also noted that the department had full knowledge of the facts about manufacture of all the goods manufactured by the respondent when the declaration was filed by the respondent. The respondent did not include the value of the product other than those falling under T.I. 14-E manufactured by the respondent and this was in the knowledge, according to the Tribunal, of the authorities. These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence." (iii) Pushpam Pharmace....
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.... them. Their bona fides were never questioned. 15. The applicability of the extended period of limitation is, therefore, required to be considered in the aforementioned context. The proviso, it is trite, provides for an exception. It is not the rule. A case, therefore, has to be made out for attracting the same. 16. In Primella Sanitary Products (P) Ltd. v. CCE [(2005) 10 SCC 644 : (2005) 184 ELT 117] a three-Judge Bench of this Court was dealing with a case where a concession was made by a counsel appearing on behalf of the Revenue. The Court opined that although the item was put under the right classification list but they had not been permitted to take a different stand stating: (SCC p. 648, para 13) "As the matter of classification has proceeded on a matter of concession of facts we do not allow the appellants to withdraw from that concession. They are now not permitted to argue on the question of classification." 17. In Pahwa Chemicals (P) Ltd. v. CCE [(2005) 189 ELT 257] this Court held: "The appellants have all along claimed that merely because they were affixing the label of a foreign party, they did not lose the benefit of Notif....