TaxTMI 
TaxTMI 
2026 (9) TMI 1841
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....IC, New Delhi, forwarding, inter alia, Annexure-1 and Annexure-2 containing information relating to TDS deductions under Section 194C of the Income Tax Act, 1961, along with a list of GSTINs linked with PANs which were not registered under Service Tax. On the basis of the information so received through DGARM, it was noticed that Shri Subhash Sharma (the appellant herein), carrying on business under the trade name M/s. Subhash Earth Movers, had declared receipts of Rs.5,42,58,819/- under the head 'Sale of Services' in his Income Tax Return for the Financial Year 2016-17, notwithstanding that he had not obtained Service Tax registration. 3. During the course of the ensuing verification, the TDS Form 26AS for the Financial Year 2016-17 was examined by the Department. It was noticed that the said statement reflected payments aggregating to Rs.5,42,58,819/-, comprising Rs.5,27,97,904/- received from M/s. RDS Projects Ltd. Rs.1,32,000/- from M/s. Makhijani Construction Company and Rs.13,28,915/- from M/s. NN Buildcon Pvt. Ltd., against which tax had been deducted under Section 194C of the Income Tax Act, 1961. The Department, proceeding on the basis of the said figures, treated the r....
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....rity Period Service Tax demand (in Rs.) 1. F.No.GEXCOM/ADJN/ST/JC/1401/2021 -ADJN-O/COMMR-CGST-Haldia/2128 dated 21.10.2021 ADC CGST&CEX, Haldia Commissionerate 2016-17 and 2017-18 (April to June 2017 ) 81,38,823 + 10,99,066 2. F.No.GEXCOM/SCN/ST/429/2022AJDN-O/0COMMR-CGST-AIZAWL dated 25.04.2022 CGST, ADC, Aizawl Commissionerate 2016-17 81,38,823 6.1. The first Show Cause Notice dated 21.10.2021, issued by the C.G.S.T. & Central Excise, Haldia Commissionerate, proposed a total Service Tax demand of Rs.92,37,889/- [comprising Rs.81,38,823/- for the Financial Year 2016-17 and Rs.10,99,066/- for the Financial Year 2017-18 (April to June 2017)]. 6.2. The second Show Cause Notice dated 25.04.2022, issued by the C.G.S.T. and Central Excise, Aizawl Commissionerate, also proposed the same demand of Rs.81,38,823/- for the Financial Year 2016-17 on the basis of the same set of receipts and allegations. 7. Both the aforesaid show cause notices came to be adjudicated together by the competent adjudicating authority vide Order-in- Original/ADC/Aizawl-CGST- Commissionerate/ST/No.02/23-24 dated 22.09.2023. During adjudication, the adjudica....
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....the Service Tax demand in the impugned order: (i) Firstly, in respect of the demand amounting to Rs. 75,47,809/- (originally initiated at Rs. 81,38,823/-) for FY 2016-17, the Ld. Counsel for the appellant submitted that the parallel confirmation of demand for the very same period by the Additional Commissioner, CGST, Kolhapur Commissionerate vide Order-in-Original No. 45/ST/ADC-RG/KOP/2022-23 dated 28.11.2022-which is currently pending adjudication before the Commissioner (Appeals), Kolhapur-renders the present demand legally unsustainable. It was argued that confirming the demand twice over for identical receipts subjects the appellant to the mischief of double jeopardy, and therefore, this component of the demand deserves to be set aside on this ground alone. (ii) Secondly, regarding the remaining demand of Rs. 10,99,066/- pertaining to the period April to June 2017, it is his plea that the appellant executed Works Contract Services by way of road construction for public use in the capacity of a sub-contractor for M/s. RDS Projects Ltd., in support of which copy of the work order issued by the Chief Engineer, PWD Highway, Mizoram to M/s. RDS Projects Ltd. has be....
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....pon such understanding of the exemption available to the activity, he neither obtained Service Tax registration nor filed ST-3 returns. 12. Before proceeding to examine the substantive question of exemption, we consider it appropriate to first deal with the plea of limitation raised by the appellant. The appellant has, amongst other grounds, specifically challenged the invocation of the extended period under the proviso to Section 73 of the Finance Act, 1994. 12.1. The underlying Show Cause Notices have sought to recover the entire demand covering the period from 2016-17 to 2017-18 (April to June 2017) by resort to the extended period, the sustainability of such invocation necessarily falls for examination at the threshold. In this regard, the relevant dates assume significance. The first Show Cause Notice was issued on 21.10.2021, covering the demand for the Financial Year 2016-17 as well as the period April to June 2017. The subsequent Show Cause Notice dated 25.04.2022, issued by the Aizawl Commissionerate, also proposed the demand of Rs.81,38,823/- for the Financial Year 2016-17 on the basis of the same receipts. In terms of Section 73(6)(i)(a) of the Finance Act, 1994, w....
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....relating to the works undertaken through M/s. RDS Projects Ltd. The documents included, inter alia, the work order dated 22.12.2011, the extension letter dated 30.06.2012 and the underlying agreement between M/s. RDS Projects Ltd. and the Chief Engineer, PWD, Highway, Mizoram. Certain further documents have also been placed before us, namely, Copy of the Agreement for the work of "Construction of a New 2-Lane Highway from KM71/00 to KM 99/83 (on River Zocha on Indo-Myanmar Border)" issued by the Chief Engineer, PWD Highway, Mizoram, Aizawl, which pertains to the amounts received during 2016-17. The relevant portion of the same is extracted below for better appreciation of the facts: - 12.4. Further, with regard to the demand raised for the period 2017-18 (till June, 2017), the appellant has also maintained that the said amounts were received from M/s. RDS Projects Ltd. in relation to construction of roads for the use of general public in view of work orders, which were extended by M/s. RDS Project Ltd. from time to time. Copy of one such letter intimating the change in end date of the work order, as furnished by the appellant, is reproduced below: - 12.4.1. The appellant'....
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.... the present demand were not clandestine receipts discovered through any independent investigation into an undisclosed business activity. The turnover relied upon by the Department was derived from the appellant's Income Tax Return and Form 26AS, including the particulars of payments on which tax had been deducted under Section 194C of the Income Tax Act, 1961. These were statutory financial disclosures made in the ordinary course and were available within the governmental tax records. Indeed, the proceedings themselves came to be initiated upon the Department receiving information through the CBIC/DGARM mechanism concerning such TDS particulars. 14. The Revenue cannot, in these circumstances, merely equate the absence of Service Tax registration or ST-3 returns with suppression of the underlying receipts and, without identifying any further positive act of concealment, invoke the extended period of limitation. In the peculiar factual circumstances of the present case, where the appellant had proceeded on a stated claim of exemption, where the receipts themselves stood reflected in statutory Income Tax records, and where, upon commencement of departmental inquiry, the appell....
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....ively transform the appellant's initial claim of exemption into a deliberate suppression of facts. 16. In the case of Continental Foundation Joint Venture v. Commissioner of C.Ex. [2007 (216) E.L.T. 177 (S.C.)] the Hon'ble Apex Court observed that "suppression" requires a deliberate, positive act of concealment with mens rea / deliberate intention to withhold tax, in the following manner: - "10. The expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrec....
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....tutory consequences attached to the procedural default; they do not, in the peculiar facts before us, furnish the necessary foundation for enlargement of the normal period of limitation. 18. Consequently, the demands proposed in the Show Cause Notices dated 21.10.2021 and 25.04.2022, cannot be sustained by resort to the extended period. The demand in the present case for the period from Financial Year 2016-17 to Financial Year 2017-18 (April to June 2017), having been raised after expiry of the normal period and without the requisite ingredients for invoking the extended period having been established, is accordingly liable to be set aside on the ground of limitation itself. 19. In this connection, it may be noted that in respect of the present proceedings, the first Show Cause Notice demanding service tax of Rs.81,38,823/- for the Financial Year 2016-17, (along with the demand of Rs. 10,99,066/- pertaining to the period April to June 2017), was issued on 21.10.2021. Another Show Cause Notice dated 25.04.2022, issued by the Aizawl Commissionerate, also proposed the same demand of Rs.81,38,823/- for the Financial Year 2016-17 on the basis of receipts of the same set of informa....
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....e find that these documents establish that all the services rendered by the Appellant are in relation to Construction of roads, which are exempted from payment of service tax, as provided under Sl. No. 13(a) of the Notification No. 25/2012. We find that the corresponding exemption in respect of the services provided by a sub-contractor was also available under Sl. No. 29(h) of the said Notification. Thus, we find that the demand of Service Tax confirmed in the impugned order is not sustainable on merits also. Accordingly, we set aside the demand of service tax along with interest confirmed in the impugned order. 21. Insofar as the question of penalty under Section 78 of the Finance Act, 1994 is concerned, it is pertinent to note that the appellant's failure to obtain Service Tax registration and to file ST-3 returns proceeded from a bona fide understanding that the road-construction sub-contracting activities undertaken by him were covered by the exemption under Notification No. 25/2012-ST dated 20.06.2012, as also noted by us in the preceding paragraphs. The receipts in question were, moreover, duly reflected in the appellant's Income Tax Returns and Form 26AS, and, upo....
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....ordingly stands affirmed. Duplication of Demand 23. Regarding the submission of duplication of the proceedings initiated for the period 2016-17, we find that the amount of Rs.81,38,823/- pertaining to the Financial Year 2016-17, which forms part of the demand confirmed in the present proceedings, had already been the subject matter of a separate show cause notice dated 20.10.2021 issued by the Joint Commissioner, CGST, Kolhapur Commissionerate. We find that the said proceedings culminated in Order-in-Original No. 45/ST/ADC-RG/KOP/2022-23 dated 28.11.2022, passed by the Additional Commissioner, CGST, Kolhapur Commissionerate, and that the said order is presently pending consideration before the Commissioner (Appeals), Kolhapur. 23.1. Since the demand of Rs.81,38,823/- relates to the very same Financial Year and, as submitted by the Appellant, arises from the same receipts which constitute the subject matter of the present proceedings, we agree with the submission of the Appellant that there is a duplication of demands of service tax. A demand for the same tax period and on the same taxable receipts cannot, obviously, be subjected to recovery twice merely because the proceed....