TaxTMI 
TaxTMI 
2026 (8) TMI 332
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....M/s. S.K. Logitech Private Limited, Anand Nagar, Bhagwati Bhawan, A.T. Road, Sivasagar, Assam - 785 640 [hereinafter referred to as the "appellant"] is a company registered under the provisions of the Finance Act, 1994 as a provider of taxable services bearing Registration No. AAMCS4070KSD001 under the categories of "Supply of Tangible Goods Service" and "Rent-a-Cab Scheme Operator Service". It is the case of the appellant that, during the period in dispute, it had been regularly filing the prescribed ST-3 Returns and discharging its Service Tax liability thereunder, though some returns were filed belatedly, which, according to the appellant, was neither deliberate nor indicative of any intent to withhold material particulars. 3. The dispute traces its genesis to an exercise undertaken by the Department on the basis of an apparent difference noticed between the gross receipts reflected in the appellant's Form 26AS and the taxable value disclosed in the ST-3 Returns for the period commencing from 2014-15 (October to March) to 2017-18 (up to June, 2017). In the course of such enquiry, the jurisdictional Superintendent, Central Goods and Service Tax, Dibrugarh issued communicat....
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....a further penalty under Section 77 ibid. 5.3. Aggrieved thereby, the appellant carried the matter in appeal before the Commissioner (Appeals), CGST, Central Excise & Customs, Guwahati. The Commissioner (Appeals), however, vide the impugned Order-in-Appeal No. 101/GHY(A)/COMMR/ST/DIB/2023 dated 17.02.2023, concurred with the findings recorded by the adjudicating authority and upheld the Order-in-Original in its entirety. 6. Being dissatisfied with the confirmation of the above demand of Service Tax, together with interest and penalties thereon, the appellant has preferred the present appeal before this Tribunal. 7. During the course of hearing, the Ld. Counsel appearing for the appellant assails the impugned Order-in-Appeal primarily on the grounds of limitation as well as violation of the mandatory requirement of pre-show cause notice consultation, which are summarized below: - On the issue of limitation: (i) The Learned Counsel submits that the entire demand is ex facie barred by limitation. It is contended that the very foundation of the Show Cause Notice is the alleged discrepancy between the figures reflected in Form 26AS and those disclosed in the ap....
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....rther contends that the impugned Show Cause Notice itself is void ab initio, having been issued in complete disregard of the mandatory requirement of pre-show cause notice consultation prescribed under the binding instructions of the Central Board of Excise and Customs. It is submitted that, on the date of issuance of the Show Cause Notice, Board Instruction F. No. 1080/09/DLA/MISC/15 dated 21.12.2015, read with the clarificatory Circular F. No. 1053/02/2017-CX dated 10.03.2017, mandated pre-show cause notice consultation in all cases involving demands exceeding Rs.50 lakhs, except preventive/offence-related matters. (ii) It is submitted that the present proceedings admittedly did not arise out of any preventive or offence-related investigation and, therefore, the aforesaid Board Instructions squarely governed the field. Nevertheless, no opportunity of preshow cause notice consultation was ever afforded to the appellant before issuance of the Show Cause Notice proposing recovery of Service Tax amounting to Rs.1,99,20,968/-. (iii) It is further submitted that the subsequent Circular No. 1079/03/2021-CX dated 11.11.2021, whereby pre-show cause notice consultation wa....
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.... to Section 73(1) of the Finance Act, 1994. It is further contended that the demand has been rightly confirmed on the basis of the material gathered during investigation and that the appellant, having failed to discharge its statutory obligations under the self-assessment scheme, cannot now seek to avoid the consequences flowing therefrom. He, therefore, prays for dismissal of the appeal and for upholding the impugned Order-in-Appeal in toto. 9. Heard both the sides and perused the records available before us. 10. Having considered the rival submissions and upon careful perusal of the records available before us, we find that the principal issue which falls for determination at the threshold is whether the Revenue was legally justified in invoking the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994. 11. At the very outset, it is noticed that the foundation upon which the impugned Show Cause Notice proceeds is not in dispute. A plain reading of paragraph 7 of the Show Cause Notice, read with Annexure-A appended thereto, unmistakably reveals that the entire demand has been raised solely on the basis of a comparison between the figure....
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....cords. The Legislature has consciously conditioned its invocation upon the existence of fraud, collusion, wilful misstatement, suppression of facts or contravention of statutory provisions with intent to evade payment of tax. These jurisdictional facts cannot be presumed; they must be affirmatively established by cogent and convincing material. In the present case, no such material is forthcoming. The Revenue has, in effect, sought to substitute its own failure to undertake timely scrutiny of statutory returns with an allegation of suppression against the assessee. Such a course is legally impermissible. The extended period of limitation cannot be invoked to compensate for administrative inaction or departmental oversight. It is equally well settled that where an assessee has been regularly filing statutory returns and the relevant information was always capable of verification by the Department, invocation of the extended period becomes wholly unsustainable in the absence of independent evidence establishing conscious concealment or an intention to evade tax. 11.4. The allegations contained in the Show Cause Notice, therefore, remain at the level of assertions unsupported by an....
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.... i.e., from their balance sheet, Profit & Loss Account and Form 26AS, then extended period of limitation is not invokable. We observe that this view has been held in various judicial pronouncements. 12.2. In the case of Arya Logistics v CCE & ST Rajkot [Service Tax Appeal No. 12389 of 2014], it has been held as under: "4. We have carefully considered the submissions made from both the sides and perused the records. On going through the entire facts of the case we are of the view that the case can be disposed of on the ground of limitation itself. 4.1 We find that the issue involved in this case is regarding the demand of service tax for the period April 2008 to March 2011 on the ground that the appellant has availed ineligible benefit of notification No. 1/2006-ST dated 1-3-2006 by discharging the service tax liability by availing Cenvat Credit and paid service tax after availing abatement of 70% of the gross amount. We find from the records and copy of ST-3 produced before us that appellant had been filing the ST-3 returns regularly to the Jurisdictional Range officers. It is on record that the appellant shown all the details in ST-3 returns. We find tha....
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....far as the issue of limitation is concerned, we do not find any ingredient of fraud or suppression with an intent to evade payment of tax. In the case of Pappu Crane Services v. CCE, Lucknow (Final Order No. 71246 of 2019 in ST Appeal No. 70707 of 2018), the Co-ordinate Bench of Tribunal at Allahabad has held that where the demand is merely based on the data appearing in the Income Tax Portal, there cannot be said to any fraud or suppression so as to justify invocation of extended period of limitation. Therefore in the present case, in our view, the demand raised for the period up to March, 2015 is completely barred by limitation and accordingly the demand is set aside. Further, since there is no element of fraud or suppression, we are of the view that the entire penalty amount is liable to be set aside." 12.4. It is also observed that in the case of Quest Engineers & Consultant Pvt. Ltd. v Commissioner, CGST & C Ex, All [2022(58) G.S.T.L. 345 (T-All)], it has been held that: - "12. Appreciating the facts and circumstances, we find that the allegations of Revenue are frivolous, that it was only on enquiry it came to know about the affairs of the appellant, i.e. pr....
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.... 12.5. Accordingly, by relying on the decisions cited above, we hold that the demand cannot be raised in this case by invoking the extended period of limitation. Thus, we hold that the demand confirmed in the impugned order by invoking the extended period of limitation is not sustainable." 11.6. The ratio emerging from the aforesaid judicial pronouncements lends complete support to the proposition that a demand founded exclusively upon statutory returns and Form 26AS data, without any further investigation establishing the indispensable ingredients of fraud or suppression, cannot be sustained by invoking the extended period of limitation. Respectfully following the aforesaid line of authority, we hold that the invocation of the proviso to Section 73(1) in the facts of the present case is wholly without jurisdiction and consequently unsustainable in law. 12. We find that the jurisdictional Superintendent, Central Goods and Service Tax, Dibrugarh had called for certain details such as, copies of ST-3 Returns, Service Tax payment challans, Form 26AS, Income Tax Returns, bank statements, copies of contracts and invoices relating to the said period. We find that during th....
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....cannot give rise to an inference of fraud, wilful misstatement or suppression of facts with intent to evade payment of Service Tax, particularly when the returns were admittedly filed thereafter and the relevant particulars stood disclosed to the Department. This circumstance, therefore, does not advance the Revenue's case for invocation of the extended period of limitation. 13. Having thus held that the Revenue has failed to establish the essential jurisdictional ingredients of fraud, collusion, wilful misstatement or suppression of facts with intent to evade payment of Service Tax so as to warrant invocation of the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994, the inevitable consequence would be to examine whether the impugned demand can nevertheless survive within the normal period of limitation prescribed under the statute. Once the extended period fails, any demand falling beyond the said limitation period necessarily cannot survive. There is no dispute that the period involved in the present proceedings extends from October, 2014 to March, 2015 up to April, 2017 to June, 2017. Equally, there is no dispute that the last statu....
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....ension of limitation occasioned by the outbreak of the COVID-19 pandemic does not advance the Revenue's case in the peculiar facts mentioned herein. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and subsequent extensions only extended deadlines that were falling due on or after March 20, 2020. As noticed hereinbefore, the normal period, reckoned from the last return filed on 05.09.2017, expired on 05.03.2020, well before the extraordinary measures adopted owing to the COVID-19 pandemic assumed relevance for computation of limitation. The subsequent exclusion of limitation during the pandemic cannot revive a cause of action or breathe life into a demand which had already become time-barred under the statute. The law relating to exclusion of limitation was intended to preserve subsisting rights; it was never intended to resurrect proceedings which had already become barred by efflux of time. In any case, even before the pandemic and the consequent suspension or exclusion of limitation came into operation, the Revenue had at its disposal the entire statutory period to initiate proceedings, which they failed to do. 15. In view of t....
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....to validate an action already undertaken contrary to the prevailing instructions. The principle that a subsequent and more onerous circular operates only prospectively stands authoritatively recognised by the Hon'ble Supreme Court in Suchitra Components v. Commissioner of C.Ex., Guntur [2007 (208) E.L.T. 321 (S.C.)]. 16.2. The object underlying the requirement of preshow cause notice consultation is not an empty formality but to afford an opportunity for meaningful engagement, narrow the areas of dispute and obviate avoidable litigation wherever possible. Where such a mandatory procedural safeguard, binding upon the departmental authorities at the relevant point of time, is admittedly bypassed without any justification, the very initiation of proceedings stands vitiated. 16.3. In fact, the very same issue came up for consideration before this Tribunal in M/s. SIS Limited v. Principal Commissioner of C.G.S.T. & Central Excise, Patna-I [Final Order No. 77549 of 2025 dated 15.10.2025 in Service Tax Appeal No. 75555 of 2024 (CESTAT, Kolkata)]. The relevant portion of the aforesaid decision is reproduced below: - "7.1. A careful reading of the above Circulars would cl....
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....s not done in this case. The cited case law is squarely applicable to the facts of the present case. 12. In view of the foregoing, we set aside the confirmed demand of Rs.34,63,730/- along with the interest and penalty thereon. The appellant would be eligible for consequential relief, if any, as per law." 16.4. It is also noteworthy that the decision in M/s. SIS Limited (supra) was a conscious decision rendered upon due consideration of the law laid down by the Hon'ble Gujarat High Court in Jay Mahakali Industrial Service (supra) wherein the very same issue has been addressed by the Hon'ble High Court. 17. Accordingly, even on this independent count, the initiation of the impugned proceedings suffers from a serious procedural infirmity, which lends further support to the conclusion already arrived at that the impugned Show Cause Notice and the orders emanating therefrom cannot be sustained in law. 18. However, insofar as the penalty imposed under Section 77 of the Finance Act, 1994 is concerned, the position stands on a different footing. It is not in dispute that there had been delays on the part of the appellant in filing certain statutory ST-3 Returns, ....