2020 (7) TMI 233 - CESTAT AHMEDABAD

Extended period of limitation - Validity of Show cause notice where service tax has been paid before issuance of SCN - Section 73(3) - Demand of service tax - reverse charge mechanism (RCM) - notification dated 03 March, 2009 - It has been contended on behalf of the Appellant that since the ECB facility for setting up the power project was to be consumed within the SEZ, it was entitled to exemption from service tax on the taxable services provided to the Appellant under the notification dated 31 March, 2004 - Circular dated 18 May, 2011 - extended period of limitation - validity of issuance of SCN - HELD THAT:- Though sub-section (1) of section 73 of the Act provides that where service tax has not been paid, the Central Excise Officer may serve notice on the person chargeable with the service tax requiring him to show cause why he should not pay the amount specified in the notice, but sub-section (3) of section 73 also provides that where any service tax has not been paid, the person chargeable with the service tax may pay the amount of such service tax before service of the notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1). The Appellant paid the service tax before service of the show cause notice and informed the Central Excise Officer of the payment in writing - The Commissioner has merely stated that since the extended period of limitation under the proviso to section 73 (1) had been invoked, the benefit of sub-section (3) of section 73 will not be available to the Appellant.

The issue as to whether sub-section (4) of section 73 of the Act would apply in the present case can be considered together with the contention raised on behalf of the Appellant that the extended period of limitation provided for under the proviso to section 73(1) of the Act could not have been invoked because the conditions for invocation are identical in both the situation - It is seen that sub-sections (1) & (4) of section 73 of the Act do not mention that suppression of facts has to be “wilful’ since “wilful’ precedes only mis-statement - It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when “suppression’ is wilful with an intent to evade payment of service tax.

Extended period of limitation - HELD THAT:- According to the Commissioner, it would be a case “amounting to deliberate non-declaration and suppression of vital information with a wilful intention to evade payment of service tax”. The Appellant, according to the Commissioner, had not furnished the required details of payment of ‘upfront fee’ either in the ST-3 returns or in any other way to the Department - The Appellant had, in reply to the show cause notice, explained that the extended period of limitation under the proviso to section 73 (1) of the Act could not have been invoked and also explained why the provisions of sub-section (4) of section 73 could not have been applied.

The show cause notice could not have been issued as the Appellant had paid the service tax with interest before the service of the show cause notice and had also informed the Department of this fact.

Validity of issuance of SCN - HELD THAT:- The Appellant is justified in asserting that the show cause notice could not have been served upon the Appellant under sub-section (1) of section 73 of the Act since the Appellant had deposited the entire tax with interest before the service of the show cause notice. The Department also could not have relied upon the provisions of sub-section (4) of section 73 of the Act as the conditions set out therein were not satisfied.

Appeal allowed - decided in favor of appellant.