TaxTMI 
TaxTMI 
2026 (9) TMI 184
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....d & Seventy Eight only) including various cess as applicable under proviso to Section 73(1) of the Finance Act, 1994 read with Section 142 and 174 of the CGST Act, 2017. (ii) I also confirm the interest on the amount of Service Tax mentioned confirmed at (i) above under Section 75 of the Act ibid read with Section 142 & 174 of CGST Act, 2017. (iii) I impose a penalty of Rs. 6,00,919/- (Rupees Six Lac Nine Hundred & Nineteen only) under Section 78 of the Finance Act, 1994 read with Section 142 & 174 of CGST Act, 2017 for failure to pay Service Tax & suppressing the facts and value of taxable service with intent to evade payment of Service Tax. (iv) I also impose a penalty of Rs.10,000/- (Rupees Ten Thousand only) collectively under Section 77(1)(c)(i) & 77(1)(c)(ii) of the Finance Act, 1994 2.1 The Appellant is engaged in providing taxable services and is having Service Tax Registration No.AAGFA3933NSD001. 2.2 On the basis of the information received from the Income Tax Authorities for the year 2016-17 it was observed that appellant has shown gross receipts towards the sale of services as in table below:- S N Description Amount 'Rs 1. ....
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....ate for the Appellant and Shri Santosh Kumar, Authorized Representative for the Revenue. 3.2 Arguing for the Appellant, learned Counsel for the Appellant submits that they had provided services of construction of airfield & drainage system to Indian Air Force which are exempt as per Serial No.12(e) of the Exemption Notification No.25/2012-ST dated 20.06.2012. The impugned Order wrongly denies the benefit of the exemption. Even otherwise the issue is purely of interpretation and the Appellant entertained a bona fide belief that they were not required to pay Service Tax in respect of these services provided and the demand is barred by limitation. 3.3 Authorized Representative reiterates the findings recorded in the impugned order. 4.1 I have considered the impugned order alongwith the submissions made in appeal and during the course of arguments. 4.2 The impugned order records as follows:- "5.1 I have carefully gone through the case records, grounds of appeal and records of the personal hearing. 5.2 I find that the appellant has produced a copy of the certificate dated 15.03.2017 issued by GE(AF), BKT certifying that they were allotted a work -"Provision....
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.... No. CE(AF)/ALD/BKT/45 of 2015-16 dated 31.12.2015 was issued after 01.03.2015. Thus, the appellant was also not eligible for the Service tax exemption under entry No. 12A of the Mega exemption Notification No. 25/2012-ST dated 20.06.2012 as amended by the Notification No. 09/2016ST dated 01.03.2016. 5.7 The appellant had suppressed the material facts from the department with malafide intention to evade the payment of Service tax in as much as the had failed to declare true taxable value in their ST3 returns. The actual taxable value was unearthed during the course of enquiry only. Therefore, the extended of period of limitation is rightly invoked in the present case." 4.3 I find that there is no dispute that the Appellant have provided the service of provision of airfield drainage system for an amount of Rs.1,07,06,900/-. They claimed that such airfield drainage system would be covered by Entry No.12(e) of Notification No 25/2012-ST dated 20.06.2012, under the category of 'sewerage treatment or disposal system' and hence would be exempt from payment of service tax. 4.4 The question that whether such airfield drainage system is covered by the entry at S No 12 (....
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....tanding it is not different that what is explained in various dictionaries unless of course the context 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. In fact 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." [Emphasis supplied] 14. In Sarabhai M. Chemicals v. Commissioner of Central Excise, Vadodara - (2005) 2 SCC 168 = 2005 (179) E.L.T. 3 (S.C.), a three-judge Bench of this Court, while referring to the observations extracted above, echoed the following views : "23. Now coming to the question of limitation, at the outset, we wish to clarify that there are two concepts which are required to be kept in mind ....
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....viso to Section 11-A, as follows :- "26... This Court in the case of Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay (supra), while dealing with the meaning of the expression "suppression of facts" in proviso to Section 11A of the Act held that the term must be construed strictly, it does not mean any omission and the act must be deliberate and willful to evade payment of duty. The Court, further, held :- 'In taxation, it ("suppression of facts") can have only one meaning that the correct information was not disclosed deliberately to escape 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.' 27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bombay [1995 Suppl. (3) SCC 462], we find that "suppression of facts" can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty. When facts were known to both the parties, the omission by one to do what he might have done and not that he must hav....
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....travention of any provision or rules. This Court has held that these ingredients postulate a positive act and, therefore, mere failure to pay duty and/or take out a licence which is not due to any fraud, collusion or willful misstatement or suppression of fact or contravention of any provision is not sufficient to attract the extended period of limitation." [Emphasis supplied] 18. We are in complete agreement with the principle enunciated in the above decisions, in light of the proviso to Section 11A of the Central Excise Act, 1944. However, before extending it to the Act, we would like to point out the niceties that separate the analogous provisions of the two, an issue which received the indulgence of this Court in Associated Cement Companies Ltd. v. Commissioner of Customs - (2001) 4 SCC 593, at page 619 = 2001 (128) E.L.T. 21 (S.C.) in the following words :- "53... Our attention was drawn to the cases of CCE v. Chemphar Drugs and Liniments - (1989) 2 SCC 127, Cosmic Dye Chemical v. CCE - (1995) 6 SCC 117, Padmini Products v. CCE - (1989) 4 SCC 275, T.N. Housing Board v. CCE - 1995 Supp (1) SCC 50 and CCE v. H.M.M. Ltd. (supra). In all these case....
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....ms Act and the proviso in particular... 56. The proviso to Section 28 can inter alia be invoked when any duty has not been levied or has been short-levied by reason of collusion or any wilful misstatement or suppression of facts by the importer or the exporter, his agent or employee. Even if both the expressions "misstatement" and "suppression of facts" are to be qualified by the word "wilful", as was done in the Cosmic Dye Chemical case while construing the proviso to Section 11-A, the making of such a wilful misstatement or suppression of facts would attract the provisions of Section 28 of the Customs Act. In each of these appeals it will have to be seen as a fact whether there has been a non-levy or short-levy and whether that has been by reason of collusion or any wilful misstatement or suppression of facts by the importer or his agent or employee." [Emphasis supplied] 19. Thus, Section 28 of the Act clearly contemplates two situations, viz. inadvertent non-payment and deliberate default. The former is canvassed in the main body of Section 28 of the Act and is met with a limitation period of six months, whereas the latter, finds abode in the proviso t....
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....efore 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 satisfactory reply did the appellant decide to claim exemption. Even if one were to accept the argument that the Development Commissioner was perhaps not the most suitable repository of the answers to the queries that the appellant laboured under, it does not take away from 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 m....
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....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 11-A(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 put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the Excise Department places reliance on the proviso it must be specifically stated in the show-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 d....
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....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 that in order to sustain an order of the Tribunal beyond a period of six months and up to a period of five years in view of the proviso to subsection (1) of Section 11A of the Act, it had to be established that the duty of excise had not been levied or paid or short-levied 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 t....
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....pression 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 take out a licence. The failure to take out the licence and thereafter to take the goods out of the factory gate without payment of duty was itself sufficient, according to Shri Ganguly, to infer that the appellant came within the mischief of Section 11A of the Act. 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 11A 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 a....
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.... matter and noted that the appellant's case was that the demand for duty for the period beyond six months was timebarred; 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 of its claim the respondent produced classification list approved by the authorities during the period 1978-79, and also produced extracts from the survey register showing that the officers had been visiting its factory from time to time and also taking note of the previous 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 sur....
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....e established that the duty of excise has not been levied or paid or short-levied 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 the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before (sic 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 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 exempte....
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....ere 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 otherwise. They responded to each and every query of the appellant, as and when called upon to do so. The authorities of the appellant must have verified the said disclosures. At least they are expected to do so. The disclosure made by the respondent was acceptable to 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) E.L.T. 117 (S.C.)] a three-Judge Bench of this Court was dealing with a case where a concession was made by a counsel appearing on beh....