TMI Blog2023 (8) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the facts of availing inadmissible CENVAT credit on the inputs which were used for non-taxable services - according to the SCN, the appellant had deposited the disputed tax and interest but not the penalty but later contested the demand itself and by doing so, the appellant had intentionally and wilfully suppressed the facts of availing inadmissible CENVAT credit. Evidently, fraud, collusion, wilful misstatement and violation of Act or Rules with an intent all have the mens rea built into them and without the mens rea, they cannot be invoked. Suppression of facts has also been held through a series of judicial pronouncements to mean not mere omission but an act of suppression with an intent. In other words, without an intent being established, extended period of limitation cannot be invoked. In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] the Supreme Court examined Section 11A of the Central Excise Act, 1944 which was worded similar to Section 73 of the Finance Act, 1994. The case of the Revenue is that the appellant had wilfully and deliberately suppressed the fact that it had availed ineligible CENVAT credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wilful misstatement or suppression of facts or violation of the provisions of Act or Rules with an intent - Intentional and wilful suppression of facts cannot be presumed because (a) the appellant was operating under self-assessment or (b) because the appellant did not agree with the audit and claimed that CENVAT credit was admissible; or (c) because the appellant did not seek any clarification from the Revenue; or (d) because the officer did not conduct a detailed scrutiny of the Returns and the availment of CENVAT credit which is alleged to be inadmissible and was discovered only during audit. It is found in favour of the appellant on the question of limitation. As the entire demand except what has been conceded by the appellant falls beyond the value period of limitation it is not necessary to examine the merits of the case - the impugned order is set aside except to the extent of denial of CENVAT credit or Rs. 1,45, 724 on the architectural services during the period 2011-12 and interest thereon and order of its recovery. Appeal partly allowed. - MR. DILIP GUPTA, PRESIDENT AND MR. P V SUBBA RAO, MEMBER (TECHNICAL) Present for the Appellant : Shri Pawan Arora, Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s interest by M/s G.D. Goenka Pvt. Ltd; I hereby dispose of the remand proceeding initiated as directed by the Hon'ble CESTAT, Delhi, vide its Final Order No. 50457-50458/2019 dated 28.03.2019, in above terms. 2. This is the second round of litigation. Initially, the matter was decided by the Commissioner by Order dated 10.4.2015 and on appeal, this Tribunal, by Final Order dated 28.3.2019, remanded the matter to the Commissioner to examine the matter both on merits and on limitation. Following this order of the Tribunal the impugned order was passed. 3. According to the learned counsel for the appellant, the appellant had built two high quality school buildings and provided high quality school education from these and this service of school education is an exempted service. The appellant also provided two other services, viz., franchisee service and renting of immovable property service on which it paid service tax. 4. The appellant availed CENVAT credit on various input services which had gone into the construction of the school building and used it to pay service tax on the franchisee service and renting of immovable property service. According to the Revenue, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sstatement or suppression of facts or violation of Act or Rules with an intent to evade payment of service tax were present in the case. He submits that if the extended period of limitation is not invoked only a small portion of the demand pertaining to architectural services for the period 2011-12 remains which, they concede, was not available as input service as this service was excluded from the definition of input services through an amendment. He submits the break-up of the demand as follows. CENVAT Credit Availed for 2008-2009 2009-2010 2010-2011 2011-2012 Total Submission on Merits Upfront Fees paid to bank 6,11,820 2,98,700 9,10,520 Full Credit Eligible under Rule 6(5) of CCR Processing Fees paid to bank 2,24,329 2,24,329 Service Charges for funds and loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionally and wilfully suppressed the facts of availing inadmissible CENVAT credit on the inputs which were used for non-taxable services. Thus, according to the SCN, the appellant had deposited the disputed tax and interest but not the penalty but later contested the demand itself and by doing so, the appellant had intentionally and wilfully suppressed the facts of availing inadmissible CENVAT credit. 9. The impugned order confirmed the demand invoking extended period of limitation on the ground that from 16.7.2001, self-assessment of service tax was introduced, wherein the Superintendent of Central Excise is empowered only to verify the correctness of the Returns under section 71 of the Act. Under self-assessment, the appellant assessee was required to assess its own tax due on the services provided by it and file returns under section 70. The appellant had wrongly availed CENVAT credit on invoices which were for input services used in the construction of school building which was used to provide service of school education which was not chargeable to service tax. Thus, the onus is on the appellant to correctly self-assess service tax and file the return within the stipulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Rules with an intent all have the mens rea built into them and without the mens rea, they cannot be invoked. Suppression of facts has also been held through a series of judicial pronouncements to mean not mere omission but an act of suppression with an intent. In other words, without an intent being established, extended period of limitation cannot be invoked. In Pushpam pharmaceuticals company vs Collector of Central Excise Mumbai [1995 (78) E.L.T. 401 (S.C.)] , the Supreme Court examined Section 11A of the Central Excise Act, 1944 which was worded similar to Section 73 of the Finance Act, 1994 and held as follows: 4. Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of course the context i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Another ground for invoking extended period of limitation given in the impugned order is that the appellant was operating under self-assessment and hence had an obligation to assess service tax correctly and take only eligible CENVAT credit and if it does not do so, it amounts to suppression of facts with an intent to evade and violation of Act or Rules with an intent to evade. We do not find any force in this argument because every assessee operates under self-assessment and is required to self-assess and pay service tax and file returns. If some tax escapes assessment, section 73 provides for a SCN to be issued within the normal period of limitation. This provision will be rendered otiose if alleged incorrect self-assessment itself is held to establish wilful suppression with an intent to evade. To invoke extended period of limitation, one of the five necessary elements must be established and their existence cannot be presumed simply because the assessee is operating under self-assessment. 17. The argument that the appellant had not disclosed in its returns that it was availing and using ineligible CENVAT credit also deserves to be rejected. The appellant cannot be faul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not have come to light. It is undisputed that the appellant has been self-assessing service tax and filing ST-3 Returns. Unlike the officers, the assessee is not an expert in taxation and can only be expected to pay service tax and file returns as per its understanding of the law. The remedy against any potential wrong assessment of service tax by the assessee is the scrutiny of the Return and best judgment assessment by the Central Excise Officer under section 72. This section reads as follows: 72. Best judgment assessment. If any person, liable to pay service tax,- (a) fails to furnish the return under section 70; (b) having made a return, fails to assess the tax in accordance with the provisions of this Chapter or rules made thereunder, the Central Excise Officer , may require the person to produce such accounts, documents or other evidence as he may deem necessary and after taking into account all the relevant material which is available or which he has gathered, shall by an order in writing, after giving the person an opportunity of being heard, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as a dilution of the statutory responsibility of the Central Excise Officers in ensuring correctness of duty payment. No doubt, audit and anti-evasion have their roles to play, but assessment or confirmation of assessment should remain the primary responsibility of the Central Excise Officers . (emphasis supplied) 22. Therefore, to say that had the audit not been conducted, the incorrect availment of CENVAT credit would not have come to light is neither legally correct nor is it consistent with the CBEC s own instructions to its officers. 23. For the sake of completeness, it needs to be pointed out that the aforesaid Manual provides for two levels of scrutiny- preliminary scrutiny of all Returns and Detailed Scrutiny of some Returns selected based on some criteria laid down in it. Relevant extracts of the manual are as follows: 1.2A Service Tax administration has had the benefit of building on the experience of Central Excise administration which is an older tax going back to 1870. More recently, in July 2000, under the CIDA-assisted capacity building project, a detailed business process reengineering exercise was initiated. For the first time, key business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one only in some cases selected based on some criteria. In those Returns, where detailed scrutiny is not done by the officers some tax may escape assessment which may not be discovered within the normal period of limitation. As a matter of policy, the CBEC, took such risk and the loss of Revenue is a result of the policy. 25. To sum up: a) The appellant assessee was required to file the ST 3 Returns which it did. Unless the Central Excise officer calls for documents, etc., it is not required to provide them or disclose anything else. b) It is the responsibility of the Central Excise Officer with whom the Returns are filed to scrutinise them and if necessary, make the best judgment assessment under section 72 and issue an SCN under Section 73 within the time limit. If the officer does not do so, and any tax escapes assessment, the responsibility for it rests on the officer. c) Although the Central Excise Officer is empowered to scrutinise all the Returns call for records and if necessary, make the best judgment assessment, if, as per the instructions of CBIC, the officer does not conduct a detailed scrutiny of same Returns and as a result is unable to discover any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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