TaxTMI 
TaxTMI 
2026 (3) TMI 746
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....rtment, it was noticed that the appellant had not paid service tax amounting to Rs. 8,73,112/-, on the receipt of considerations amounting to Rs. 58,20,745/ during the F.Y. 2016-17. The appellant has declared the consideration as sale of services credited to the appellant as per Form-26AS for the same period. 2.3 Accordingly, it was observed that appellant has short paid service tax as detailed in table below:- FY Sale of Services (ITR) Total of the Amount credited under Section 194 C, 194H, 1941, 194) in Form 26AS Higher (taxable value as per Sale of Services ( ITR ) and total value for TDS/Form 26 AS Rate of Service tax inclusi ve of all cess . Service tax payable on higher (taxable value inclusive of all cess Service tax deposit as per challans in ST- 3 Returns Short paid Service tax Inclusive of all # cess 2016-17 58,20,745/- 58,20,745/- 58,20,745/- 15% 8,73,112/- 0 8,73,112/ 2.4 Appellant vide letters dated 11.06.2021, 19.07.2021 and 17.08.2021 asked them for various financial documents indicating nature of services provided, details of services, if exempted services provided as per relevant notification. No information was....
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....ntravention of the provisions of the Finance Act, 1994 read with Section 142, Section 173 and Section 174 of CGST Act, 2017." 2.6 Appellant filed reply of show cause notice vide letter dated 18.08.2022 alongwith copy of Form 26AS, Audited balance sheet, profit and loss account, ITR, payment certificate issued by Madhyanchal Vidhut Vitran Nigam Ltd. regarding work contract services executed by them during the financial year. 2.7 The said show cause notice was adjudicated as per the Order-in-Original No.158/AC/ADJ/ST/Div.LKO-IV/BBK/Krishna Kumar/2022-23 dated 21.03.2022 by holding as follows:- "ORDER I drop the proceedings against M/s Krishna Kumar Singh, Bhawaniapur Tekuri, Nanpara District-Bahraich-271865 initiated vide show cause notice No.168/AC/ST/Krishna/DIV-LKO-IV-BBK/reg/2021 dated 06.10.2021." 2.8 Aggrieved Revenue have filed appeal before Commissioner (Appeals) which has been allowed as per the impugned order referred in para 1 above. 2.9 Aggrieved appellant have filed this appeal. 3.1 Appellant is absent on call inspite of last opportunity of hearing. I have heard Shri Santosh Kumar learned Authorised Representative appearing for the revenu....
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....tax is due against the respondent. However, considering the undisputed fact that they have not been given tax amount by the recipients of the tax, it will be reasonable to give the cum-tax benefit to the respondent, i.e. the gross amount received may be considered as inclusive of the tax amount and then liability may be worked out. Further since a penalty corresponding to the tax amount would be imposable under Section 78 of the Finance Act, 1994." 4.3 In their appeal, appellant has given following grounds:- "(A) Because the impugned order dated 29-08-2024 passed by the respondent is arbitrary, discriminatory and unwarranted. (B) Because the impugned order dated 29-08-2024 passed by the respondent is violative of Principle of natural justice. (C) Because the impugned order dated 29-08-2024 passed by the respondent is against the provisions of sub-clause (a) of clause no. 12 of the Notification no. 25/2012-Service Tax dated 20th June, 20012. (D) Because as per the provisions of sub-clause (a) of clause no. 12 of the Notification no. 25/2012-Service Tax dated 20th June, 20012 the appellant is not liable to pay the service tax at all. (E....
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....Cus., dated 3-6-1997" 22. We are not persuaded to agree that this observation by the Commissioner, unfounded on any material fact or evidence, points to a finding of collusion or suppression or misstatement. The use of the word "willful" introduces a mental element and hence, requires looking into the mind of the appellant 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 Develop....
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.... to attract the proviso to Section 11-A(1) it must be alleged in the show-cause notice that the duty of excise had not been levied or paid by reason of fraud, collusion or willful misstatement or suppression of fact on the part of the assessee or by reason of contravention of any of the provisions of the Act or of the Rules made thereunder 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 :....
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....f up to five years only where the nonpayment or short payment of service tax is due to fraud, collusion, wilful misstatement, suppression of facts, or contravention of the provisions of the Act or Rules, with an intent to evade payment of service tax. 9.1. It is evident from the communication dated 02.12.2013 issued by 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 judgmen....
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.... there is enough scope for believing that there was no need of taking out a licence under Rule 174 of the said Rules and also that there was no need of paying duty at the time of removal of dhoop sticks, etc. Counsel further submitted that in any event apart from the fact that no licence had been taken and for which no licence 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 conse....
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....or short-paid or erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of the Act or of the Rules made thereunder. The Tribunal in the appellate order has, however, reduced the penalty to Rs 5000 and had also upheld the order of the confiscation 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 th....
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....ing under T.I. 14-E manufactured by the appellants has to be taken to be within the knowledge of the authorities. They could have taken corrective action in time. We therefore find there was no warrant in invoking longer time-limit beyond six months available for raising the demand. So far as the demand for the period within six 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 levie....
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....ntext 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. Infact 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 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. ....