TaxTMI 
TaxTMI 
2025 (5) TMI 2263
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....f limitation of five years in the instant case. The prevailing rate of service tax during the period under question was 15% and accordingly the appellant is liable to pay service tax on Rs. 43,02,000/- @15% which comes to Rs. 6,45,300/ - alongwith applicable interest. The appellant is also liable to pay mandatory penalty of Rs. 6,45,300/- under Section 78 of the Finance Act, 1994. Further, if the appellant pays service tax and interest determined as above within 30 days of the receipt of this order, the penalty payable shall be 25% of the service tax, so determined. Since the mandatory penalty under Section 78 of the Finance Act, 1994 has been imposed upon the appellant, I set aside the penalties imposed upon the appellant under Section 77(2), 77(1)(c) and 77(1)(d) of the Finance Act, 1994. The appeal is disposed of in above manner." 2.1 The appellant, having Service Tax Registration No. AACCL9983ESD001 are registered with the department and providing services under the category of Erection, Commissioning and Installation'", Maintenance and Repair' and "Works Contract Service". 2.2 On the basis of third party information received from Income Tax Department fo....
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....alty payable shall be 25% of the service tax, so determined. • I impose penalty u/s 77(2) of Rs. 10000 • I impose penalty u/s 77(1)(c) of Rs. 10000 • I impose penalty u/s 77(1)(d) of Rs. 10000" 2.5 Aggrieved appellant filed the appeal before the Commissioner (Appeal) which has been disposed as per the impugned order referred in para 1 above. 2.6 Aggrieved appellant has filed this appeal. 3.1 I have heard Shri Dharmendra Kumar, Chartered Accountant for the Appellant and Ms Chitra Srivastava, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned Chartered Accountant submits,- • the appellant during the financial year 2016-17 received Rs. 1,07,55,000/- on account of Services provided as Works Contract' to Military Engineering Services (MES) for installation of Mechanical Laundry Plant which comes under Ministry of Defense and accordingly, they entertained bonafide belief that they were entitled for benefit of Exemption of Service Tax in terms of Entry No. 12A of Notification No. 25/2012 ST dated 20.06.2012. • the show-cause notice thus issued invoking extended period of limitati....
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....ed documents viz, ITR, Audit report, Balance Sheet, P & L Account, Works Contract Receipts, Annual VAT Return, Form 26AS etc. alongwith the reply to the SCN during the adjudication proceedings. 5.3 In this context, from perusal of the copy of Contract No. CELZ/LKO/01 of 2016-17 issued by the Chief Engineer, MES, Lucknow, I find that the appellant entered into the agreement with MES for execution of said work on 28.05.2016. I notice that the services being provided to the Government, a local authority or a Governmental authority relating to construction, repair, maintenance etc. of a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business were exempted from Service tax under Entry no. 12la) of the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012. This exemption was withdrawn w.e.f. 01.04.2015 vide Notification No. 06/2015-ST dated 01.03.2015. However, the said exemption was restored retrospectively for the period 01.04.2015 to 29.02.2016 vide Section 102 as inserted in the Finance Act, 1994 by the Finance Act, 2016 with the condition that the work should be executed under a contract entered i....
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....try of Defence, Government of India. Undisputedly the tender/ award letter all in respect of provision of these services are much after 01.03.2015, and would not fall within the exempted category as per S No 12A inserted by exemption Notification No 9/2016-ST, in Notification No 25/2012-ST dated 20.06.2016. 4.4 I find that for invoking extended period of limitation, the • Show Cause Notice records as follows: 08. Whereas. the party had suppressed material facts and contravened the provisions of the Finance Act. 1994 and the Rules of the Service Tax Rules, 1994 with intent to evade payment of Service Tax despite being engaged in providing taxable services and receiving payments and not depositing Service Tax with the Government exchequer. Had the Department not initiated the inquiry against the party on the basis of the third party information, the said non-payment of service tax could not have been unearthed. The party had willfully suppressed their ta.able income from the department with the intent to evade payment of.Service Tax. Therefore. extended period of limitation of five years is invokable in this case. Therefore, proviso to Section 73(1) of the Fi....
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....g 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 non-payment would amount to ordinary default? Construing mere non-payment 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 payment of duties and leaves cases of collusion or willful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso. 13. This Court, in Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay - 1995 Supp (3) SCC 462 = 1995 (78) E.L.T. 401 (S.C.), while interpreting the proviso of an analogous provision in Section 11A of The Centra....
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....been levied or paid or has been short-levied or short-paid or erroneously refunded on account of fraud, collusion or wilful mis-statement or suppression of facts, or in contravention of any provision of the Act or Rules with the intent to evade payment of duty, demand can be made within five years from the relevant date. In the present case, we are concerned with the proviso to section 11A(1). 24. In the case of Cosmic Dye Chemical v. Collector of Central Excise, Bombay (1995) 6 SCC 117, this Court held that intention to evade duty must be proved for invoking the proviso to section 11A(1) for extended period of limitation. It has been further held that intent to evade duty is built into the expression "fraud and collusion" but mis-statement and suppression is qualified by the preceding word "wilful". Therefore, it is not correct to say that there can be suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for invoking the proviso to section 11A. 25. In case of Pushpam Pharmaceuticals Company v. C.C.E. [1995 (78) E.L.T. 401 (S.C.)], this Court has held that the extended period of five years under the proviso to section 1....
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....5 Supp (3) SCC 322 = 1995 (76) E.L.T. 497 (S.C.), this Court held that mere non-disclosure of certain items assessable to duty does not tantamount to the mala fides elucidated in the proviso to Section 11A(1) of the Central Excise Act, 1944. It enunciated the principle in the following way :- "The mere non-declaration of the waste/by-product in their classification list cannot establish any wilful withholding of vital information for the purpose of evasion of excise duty due on the said product. There could be, counsel contended, bona fide belief on the part of the assessee that the said waste or by-product did not attract excise duty and hence it may not have been included in their classification list. But that per se cannot go to prove that there was the intention to evade payment of duty or that the assessee was guilty of fraud, collusion, misconduct or suppression to attract the proviso to Section 11A(1) of the Act. There is considerable force in this contention." Therefore, if non-disclosure of certain items assessable to duty does not invite the wrath of the proviso, we fail to understand how the non-payment of duty on disclosed items, after inquiry from the....
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....eld that so far as fraud, suppression or misstatement of facts was concerned the question of intent was immaterial. While disagreeing with the aforesaid interpretation this Court at p. 119 observed as follows : (SCC para 6) '6. Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as misstatement or suppression of facts are concerned, they are clearly qualified by the word 'wilful' preceding the words 'misstatement or suppression of facts' which means with intent to evade duty. The next set of words 'contravention of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intent to evade payment of duty'. It is, therefore, not correct to say that there can be a suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11-A. Misstatement or suppression of fact must be wilful.' The aforesaid observations show that the words "with intent to evade payment of duty" were of utmost relevance while construing the earlier expression regarding t....
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....ng the words "misstatement or suppression of facts" clearly spells out that there has to be an intention on the part of the assessee to evade the duty." 21. The Revenue contended that of the three categories, the conduct of the appellant falls under the case of "willful misstatement" and pointed to the use of the word "misutilizing" in the following statement found in the order of the Commissioner of Customs, Raipur in furtherance of its claim : "The noticee procured 742.51 kl of furnace oil valued at Rs. 54,57,357/- without payment of customs duty by misutilizing the facility available to them under Notification No. 53/97-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....
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....essee are made in the show cause notice, a requirement that the show cause notice in the present case fails to meet. In Aban Loyd Chiles Offshore Limited and Ors. (supra), this Court made the following observations : "21. This Court while interpreting Section 11-A of the Central Excise Act in Collector of Central Excise v. H.M.M. Ltd. (supra) has observed that in order to attract the proviso to Section 11-A(1) it must be shown that the excise duty escaped by reason of fraud, collusion or willful misstatement of suppression of fact with intent to evade the payment of duty. It has been observed : '...Therefore, in order 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 ....