TMI Blog2014 (11) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... ept that such period can be segregated from the rest of the periods for which the extended period is invoked, the impugned show cause notice cannot be validated having based upon the inclusion of the value of HSD supplied free of cost by the service recipient. Furthermore, the foundation of the impugned notice is laid on Rule 5(1) of the said rules, which is declared ultra vires by the Delhi High Court [2012 (12) TMI 150 - DELHI HIGH COURT] - It is found that the value of HSD provided free of cost by the service recipient cannot be brought within the value of the transaction exposed to the charging section and, therefore, the impugned show cause is liable to be quashed and set aside. - Decided in favour of assessee. - W.P. No. 32716 (W) of 2013 - - - Dated:- 25-4-2014 - Harish Tandon, J. Shri J.K. Mittal, Paritosh Sinha, Abra Majumdar, Ms. Dolon Dasgupta and Shiladitya Barma, for the Petitioner. Shri Md. Nizamuddin, R. Bhardwaj and K.K. Maiti, for the Respondent. JUDGMENT The challenge is made to a show cause notice dated 21st March, 2013 issued by the Additional Commissioner, Service Tax Commissionerate, Kolkata primarily on the ground that invocation of Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Finance Act, 1994 provides a limitation of eighteen months from the relevant date for issuance of the notice where any service tax has not been levied or paid or has been sought levied or sought paid or erroneously refunded to be served with the notice on a person chargeable with service tax requiring him to show cause why such amount should not be paid by him. It is submitted that proviso to Section 73(1) of the said Act extends the period of eighteen months to five years in case of fraud, collusion, willful mis-statement, suppression of fact or contravention of any provision of that Chapter or the Rules made therein. He thus submits that the show cause notice, which covers 2007-2008, is ex facie bad being beyond the period of five years. It is further submitted that none of the ingredients incorporated in the proviso to Section 73(1) of the said Act is spelt out in the said show cause notice for invocation of the extended period. 4. In support of the aforesaid contentions, he relies upon a judgment rendered by the Co-ordinate Bench of this Court on the earlier show cause notice. It is strenuously submitted that once the notice is held to be invalid for the extended period u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear exposition and convenience, it would be profitable to quote Section 73(1) of the Finance Act, 1994 which reads thus : 73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. - (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within eighteen months from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of - (a) fraud; or (b) collusion; or (c) willful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the flow-chart of manufacturing process submitted to the Superintendent of Central Excise on 17-5-1990 clearly mentioned the fact of post-forming process on the rubber, the finding on suppression of facts of CEGAT cannot be approved by us. This Court in the case of Pushpam Pharmaceuticals Co. v. CCE while dealing with the meaning of the expression suppression of facts in the 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 wilful to evade payment of duty. The Court further held : (SCC pp. 463-64, para 4) 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. (emphasis supplied) 27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceuticals Co. v. CCE we find that suppression of facts can have only one meaning that the correct information was not disclosed delibera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot agree with the reasoning and the conclusion reached by the Tribunal. 10. The ratio which could be culled out from the aforesaid reports is that the extended period of limitation can be invoked on clear exposition that there has been a conscious act on the part of the petitioner to evade the tax by non-disclosing the fact which, if disclosed, would attract the service tax under Sections 66 67 of the Finance Act. The non-disclosure of the fact which, even if, disclosed would not have brought within the charging section cannot be brought within the ambit of suppression of fact for the purpose of extension of period of time. The department has to adhere to the decisions of the Tribunals or Court and cannot take a stand contrary thereto. The Supreme Court in case of Union of India v. Kamlakshi Finance Corporation Ltd. reported in 1991 (55) E.L.T. 433 (S.C.) held that the Revenue Officers are bound by the decisions of the Appellate Tribunal by observing the judicial discipline, even if, the order of the Tribunal or the Court harshly effect the interest of the revenue in these words : 6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the taxable service and nothing else. There is thus inbuilt mechanism to ensure that only the taxable service shall be evaluated under the provisions of 67. Clause (I) of sub-section (1) of Section 67 provides that the value of the taxable service shall be the gross amount charged by the service provider for such service . Reading Section 66 and Section 67(1) together and harmoniously, it seems clear to us that in the valuation of the taxable service, nothing more and nothing less than the consideration paid as quit pro quo for the service can be brought to charge. Sub-section (4) of Section 67 which enables the determination of the value of the taxable service in such manner as may be prescribed is expressly made subject to the provisions of sub-section (1). The thread which runs through Sections 66, 67 and Section 94, which empowers the Central Government to make rules for carrying out the provisions of Chapter V of the Act is manifest, in the sense that only the service actually provided by the service provider can be valued and assessed to service tax. We are, therefore, undoubtedly of the opinion that Rule 5(1) of the Rules runs counter and is repugnant to Sections 66 67 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral adjudication orders impugned in these appeals are unsustainable on the aforesaid analysis and are accordingly quashed. The Appeals are allowed but in the circumstances without costs. 13. In view of the clear exposition of law that the value of the diesel supplied free of cost by the service recipient cannot constitute taxable event, the authorities cannot take a contrary stand by placing reliance upon the provision which has been declared ultra vires. This Court, therefore, has no hesitation to hold that the extended period invoked by the authority on the plea of suppression of fact is illegal and renders the same to be invalid. It is in dispute that one of the period covered in the impugned show cause notice is apparently within the normal period of limitation provided under Section 73(1) of the said Act, even if, this Court accept that such period can be segregated from the rest of the periods for which the extended period is invoked, the impugned show cause notice cannot be validated having based upon the inclusion of the value of HSD supplied free of cost by the service recipient. Furthermore, the foundation of the impugned notice is laid on Rule 5(1) of the said rules ..... X X X X Extracts X X X X X X X X Extracts X X X X
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