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2016 (2) TMI 691 - GAUHATI HIGH COURT

2016 (2) TMI 691 - GAUHATI HIGH COURT - 2016 (42) S.T.R. 803 (Gau.) - Extended period of limitation - willful intention to evade service tax or not - the stance taken by the petitioner all along is that the petitioner has been submitting its Service Tax returns regularly by showing the details and particulars of the exemption availed of by them, which were within their knowledge and further that the respondent No. 3, while issuing the impugned order, has failed to consider the relevant fact that .....

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service tax paid by the Service Receiver was realized from the petitioner as Service Provider or whether the submissions of service tax returns regularly showing all the details and particulars are indicative of the fact that these facts are within the knowledge of the respondent authorities. These are vital facts which, if duly considered by the respondent No. 3, would have enabled him to come to the correct conclusions. - The initial burden is on the department to prove that the situatio .....

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tion (C) No. 6777/14, Writ Petition(C) No. 6778/14 - Dated:- 3-2-2016 - T. Vaiphei, ACJ And Rumi Kumari Phukan, JJ. For the Petitioner: Mrs. M. Hazarika, Sr. Advocate Mr. M. Sharma, Ms. E. Bharali, Advocates For the Respondents : Mr. SC Keyal, ASGI JUDGMENT & ORDER (CAV) This batch of three writ petitions involving virtually a common question of fact and of law were heard together and are now being disposed of by this common judgment. In WP(C) No. 6776 of 2014, the petitioner, which is priva .....

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(respondent 3) confirming the demand and recovery of Service Tax from it and the imposition of a penalty of 23,05,054/-. In WP(C) No. 6777 of 2014, the same petitioner is challenging the notice dated 16-1-2014 issued by the same respondent requiring him to show cause as to why the Service Tax amounting to ₹ 22,80,518/- Education Cess amounting to ₹ 45,611/- and Secondary and Higher Education Cess totalling ₹ 22,805/- which come to a total of ₹ 23,48,934/- should not be d .....

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llate order dated 30-6-2014 passed by the Commissioner (Appeals) requiring it to pay ₹ 5,11,882/- and an equally amount by way of penalty as well the order dated10-10-2014 requiring it to pay the said amount following the dismissal of its appeal. 2. The case of the petitioner in WP(C) No. 6776 of 2014, which is representative of the remaining two writ petitions to be governed by this decision, is that it was awarded a work order (1) No. 400mm NB, 20 km long Natural Gas Pipeline from Chabua .....

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ernment of India in the Ministry of Finance issued a Circular dated 6-7-2012 in the matter of clarification of Taxation Rules, which provided that consequent upon the change introduced at the time of Budget, 2012 on the point of Taxation Rules, 2011 together with revision of the Service Tax rate from 10% to 12%. As per this clarification, it was provided that works contract earlier paying Service Tax @ 4.8% under Works Contract (Composite Scheme for payment of Service Tax) Rules, 2007 are now re .....

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The petitioner duly submitted those documents. One thing led to another whereafter the impugned notice was issued upon the petitioner. The respondent No. 3, after hearing the petitioner, passed the impugned order dated 27-6-2014 issued on 30-6-2014 confirming the demand of Service Tax amounting to ₹ 23,05,054/- with a penalty of 23,05,054/- as noticed earlier on the ground of suppression of fact. Aggrieved by this writ petition has been filed. 3. It is the contention of Mrs. M. Hazarika, t .....

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the impugned order, has failed to consider the relevant fact that in terms of the Letter of Award, the burden of Service Tax was on the Service Receiver and the component of Service Tax paid by the Service Receiver was realized from the petitioner as Service Provider, which clearly indicates that it had nothing to gain by evading payment of the Service Tax. The learned senior counsel further contends that the petitioner neither suppressed any fact before the Revenue nor violated any provision of .....

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d the show cause notice, he has no objection if the case is remanded to the respondent No. 3 for fresh decision as to whether the petitioner is guilty of suppression of fact with intent to evade payment of the Service Tax. 4. It may be noted that the provision of Section 73(1) of Finance Act, 1994 is couched in the language exactly similar to Section 11-(A)(1) of the Central Excise Act, 1944. The scope and ambit of Section 11-(A)(1) of the Central Excise Act, 1994 came up for consideration befor .....

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, 1944, a proper officer can reopen the approvals/assessments in cases of escapement of duty on account of non-levy, non-payment, short-levy, short-payment or erroneous refund, subject to it being done within one year from the relevant date. On the other hand, the demand for duty in relation to extended period is mentioned in the proviso to Section 11-A(1). Under that proviso, in cases where excise duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded on .....

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r extended period of limitation. It has been further held that intent to evade duty is built into the expression fraud and collusion but misstatement and suppression is qualified by the preceding word wilful . Therefore, it is not correct to say that there can be suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for invoking the proviso to Section 11-A. 25. In case of Pushpam Pharmaceuticals Co. v. CCE 1995 Supp (3) SCC 462 : (1995) 78 ELT 401 this .....

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ds raised by the department in the impugned three show-cause notices were time-barred. The first show-cause notice was dated 30-12-1987. It was in respect of the period 1-4-1986 to 30-11-1986. The second show-cause notice was dated 6-4-1988. Under the said notice, the department has demanded duty for the period 1-3-1984 to 28-2-1986. The last show-cause notice was dated 20-6-1988, for the period 1-4-1986 to 30-4-1987. Therefore, Section 11-A(1) was not applicable. 27. The question is, whether in .....

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sclosure regarding the nature of the goods. These returns were regularly assessed by the department. The material placed on record shows filing of gate passes, invoices and classification list. They indicated the names of the consignees. A mere reading of these names would indicate that sorbitol solution was sold to non-pharmaceutical companies like M/s Golden Tobacco Co. Ltd. Despite such disclosure, the department approved the classification list as well as RT-12 returns. There was no reopenin .....

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setting aside the show-cause notices. 28. In the case of Jayant Vitamins Ltd. v. Union of India (1991) 53 ELT 278 (MP) show-cause-cum-demand notice was issued by the department alleging non-user of bulk drugs for a specified purpose. In that matter, goods were cleared without payment of duty, as in the present case, on the basis of certificate from the Drugs Controller. In that case, same Notification No. 234/86 was relied upon by the assessee. However, on facts, the High Court found that the a .....

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n 11-A(1) as the assessee had indicated in the gate passes the material facts. On this point, before concluding, we may mention that in the present case, we have come to the conclusion that there was no wilful suppression of facts on the part of the appellant as the appellant had filed the gate passes, invoices and monthly returns, which were all duly approved by the department from time to time. The invoices, gate passes and the monthly returns indicated the names of the consignees from which i .....

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tances, although on merits the department succeeds, these appeals need to be allowed as the impugned show-cause-cum-demand notices were time-barred and as no case is made out by the department for invocation of the proviso to Section 11-A(1) of the said Act. 5. In the case at hand, the stance taken by the petitioner all along is that the petitioner has been submitting its Service Tax returns regularly by showing the details and particulars of the exemption availed of by them, which were within t .....

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ons of Section 11-(A)(1) of the Central Excise Act in Sarabhai M. Chemical (supra) will also apply while construing the provisions of Section 73(1) of the Finance Act, 1994. So construed, the Revenue, before invoking Section 73(1) of the Finance Act, 1994, shall have to prove that there was wilful suppression of fact by the petitioner. After all, this provision cannot be applied just for any omission on the part of the petitioner unless it is a deliberate attempt to escape from payment of the Se .....

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Section 73(1) of he Finance Act, a proper officer can reopen the approvals/assessments in cases of escapement of duty on account of non-levy, non-payment, short-levy, short-payment or erroneous refund, subject to it being done within one year from the relevant date. On the other hand, the demand for duty in relation to extended period is mentioned in the proviso to Section 73-(A)(1). Under that proviso, in cases where excise duty has not been levied or paid or has been short-levied or short-paid .....

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ay say so, the respondent No. 3 does not appear to understand the difference between the scope and ambit of Section 73(1) and the proviso to Section 73(1) as evident from his findings at para4.6 of his order, which reads as under: 4.6 Regarding suppression of facts, I observe that the noticee have (sic) resorted to suppress the material facts from the department with intent to evade Service Tax. Had the Department not undertaken any investigation, the matter would have been in a dark corner and .....

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ct. Hence, there are other machinery of other department like Audit and Anti-evasion to monitor such elements of evasion. I, therefore, find that the Show Cause Notice was issued rightly by invoking an extended period of five years of suppression of facts. The extended period of limitation for recovery of Service Tax is invocable in terms of the proviso to Section 73(1) of the Finance Act, 1994 for the situation as discussed in the above show cause notice. Further, since Section 78 of the Financ .....

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x returns regularly showing all the details and particulars are indicative of the fact that these facts are within the knowledge of the respondent authorities. These are vital facts which, if duly considered by the respondent No. 3, would have enabled him to come to the correct conclusions. Since the proviso extends the period of limitation from six months to five years it has to be construed strictly. The initial burden is on the department to prove that the situations visualised by the proviso .....

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