TMI Blog2019 (10) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... The Addl. Commissioner s letter dated 24.08.2012, issued after more than 2 years of the issue of impugned order dated 16.03.2010, is a communication from an Officer below the rank of Commissioner cannot be entertained at this stage, since not disowned by the Ld. Commissioner himself. In any case, the very fact that the Ld. Commissioner on being satisfied that tax amount could not be recovered by appellants from its clients, he reduced the tax demand. Further, the very applicability of tax on security service being a new subject, the conduct of assessee could not be doubted - the Department cannot allege suppression on the part of the assessee to justify invocation of extended period of limitation. In view of the statutory legal provisions as applicable during the period from 16.10.1998 to 31.03.2004 involved in this case and the discussions made, we are of the view that the impugned Show Cause Notice dated 17.01.2005 could not be legally issued and therefore, the demand of service tax, interest and penalty cannot sustain - appeal allowed - decided in favor of appellant. - Service Tax Appeal No.217 of 2010 - FINAL ORDER NO. 76385/2019 - Dated:- 22-10-2019 - HON BLE S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re has been delay in tax payment, applicable interest was paid on the direction of the Range Superintendent. Necessary endorsements for said verification by the Superintendent have been duly made in the ST-3 periodical returns. An Audit was carried out of the records of the appellant wherein the difference between the figures appearing in Profit Loss A/c and the Service Tax Returns was pointed out. Based on the said Audit, Show Cause Notice dated 17.01.2005 was issued by the Learned Assistant Commissioner proposing demand of service tax of ₹ 1,01,18,128/- together with interest u/s 75 and penalties u/s 76 and 78. It is the case of the appellant that demand could not be raised based on the Profit Loss Account which is prepared on the accrual/mercantile basis. They also submitted that wherever the tax amount was reimbursed by the clients the same was deposited and that there was ignorance of law and there was no suppression on their part. Vide adjudication order dated 11.08.2006, the demand as proposed in the SCN was confirmed along with interest and penalties were imposed. In the appeal bearing no. ST-48/2006 before the Tribunal against the aforesaid order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in dispute in the impugned order. He also relied on following decisions of the Tribunal wherein it has been held that extended period of limitation could not be invoked in cases where the assessee has duly informed in writing about the practice followed and their understanding about the tax position:- Purna Plastics Industries vs. CCE, Calcutta 1999 (112) ELT 523 (Tri- Kol) ITW India Ltd. vs. CC, Hyderabad 2008 (222) ELT 257 (Tri-Bang), upheld by the Hon ble Andhra Pradesh High Court, as reported on CCE vs. ITW India Ltd 2011 (268) ELT 311 (AP) Modipon Fibre Co. vs. CCE Meerut 2001 (135) ELT 1420 (Tri-Del) upheld by the Hon ble Supreme Court as reported in 2007 (218) ELT 8 (SC). American Quality Assessors (I) Pvt Ltd. vs. Asst Comm (ST), Hyderabad 2009 (16) STR 413 (Tri-Bang.) SIMS Friction Products vs. CCE, New Delhi 2007 (220) ELT 95 (Tri-Del) DCB Bank Ltd. vs. Commissioner of Service Tax, Mumbai-I 2019 (21) G.S.T.L. 798 (Tri. - Mumbai) Grand Ashok vs. Commissioner of Central Excise, Banglore 2019 (365) E.L.T. 828 (Tri. - Bang.) 4.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the service tax returns to find the difference in figures. He submitted that the Range Superintendent should have verified the same in terms of Section 71 of the Act to find out if there was any short payment of tax. He also submitted that the demand raised merely on the basis of Balance Sheet cannot allege fraud or suppression inasmuch as the Balance Sheet is a public document. He relied on the following decisions: Hindalco Industries Ltd. vs. CCE, Allahabad 2003 (161) ELT 346 (Tri-Del) Kirloskar Oil Engines Ltd vs. CCE, Nasik 2004 (178) ELT 998 (Tri-Mum) 4.6 The Ld. CA also raised a legal issue that where the extended period of limitation has been invoked by the Department under Section 73 and the same is not upheld, no demand can alternatively be imposed for normal period of limitation as there was no provision in Section 73 to enforce part of demand for normal period of limitation of six months. He submitted that it is only w.e.f. 10.05.2013 (vide amendment made in Finance Act, 2013), sub- section (2A) was inserted in Section 73 to provide that demand could be enforced to the extent covered for normal period, when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and also to decide the issue on limitation. The Ld. Commissioner in de-novo adjudication vide the impugned order has reduced the service tax liability from ₹ 1,01,18,128/- to ₹ 87,54,969/- by extending the cum-tax benefit on being satisfied that the tax amount has not been realised by the appellant. Thus, it can be concluded that the impugned SCN was issued by solely placing reliance on the figures as appearing in the audited financial statements of the appellant. Be that so, as it may, we also find that the appellant had duly informed the department vide their letters dated 07.02.2000 and 14.06.2001, which are on record and have not been disputed by the Ld. Commissioner in his impugned order, that they were not depositing the tax amount in cases where the clients are not reimbursing the tax amount. We find that in identical cases, where duty could not be paid by the assessee which was well within the knowledge of the department, this Tribunal has held that allegation of wilful suppression could not be levelled against the assessee. The Tribunal in the case of Purna Plastics Industries vs. CCE, Calcutta (Supra) has observed as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no suppression of facts in respect of one of the items, namely, 8A RED, it does not stand to reason as to why a different stance should be adopted by the Revenue for the said two products in respect of which the intimation was clearly given as to the nature of the activity, namely, re-packing bulk goods into smaller packs and labelling them with their own brand name. The communication was addressed to the Asstt. Collector of Central Excise, who, at the relevant time, was the proper officer. The Revenue cannot dis-own such communication as was sought to be done during the arguments by the learned Departmental Representative by pointing out that, the Collector was the authority mentioned in Rule 43. The submission ignores the scheme of delegation of powers contemplated by Rule 5 of the Central Excise Rules, 1944, and the nature of the powers delegated to the Asstt. Collector at the relevant time. 8.For the foregoing reasons there was no warrant for invoking the extended period for issuing the show cause notice dated 29-3-2000 and the show cause notice is therefore time barred. The impugned order is, therefore, set-aside to the extent that it holds that the show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below the rank of Commissioner cannot be entertained at this stage, since not disowned by the Ld. Commissioner himself. In any case, the very fact that the Ld. Commissioner on being satisfied that tax amount could not be recovered by appellants from its clients, he reduced the tax demand. Further, the very applicability of tax on security service being a new subject, the conduct of assessee could not be doubted. Thus, we hold that the Department cannot allege suppression on the part of the assessee to justify invocation of extended period of limitation. 9. With regard to the further contention made by the appellant that the SCN dated 17.01.2005 cannot be converted for raising demand for shorter period of limitation (i.e. normal period) when the extended period of limitation is found not to be invokable in absence of willful suppression or fraud, we note that amendment was made vide the Finance Act, 2013 whereby the following sub-section (2A) was inserted to Section 73:- (2A) Where any appellate authority or tribunal or court concludes that the notice issued under the proviso to sub-section (1) is not sustainable for the reason that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (2A) of Section 73 of the Finance Act, 1994, we may note that what is attempted to be resurrected through that provision is what could have loss otherwise to the Revenue if action proceeded under Section 73(1) would fail before the Appellate Authority or Tribunal or Court on a ground that the notice issued under sub-section (1) is not sustainable for the reason that the different vitiating elements enumerated therein are not established. 7. The provisions contained in sub-section (2A) of Section 73 of the Finance Act, 1994 was introduced only w.e.f. 10-5-2013 on the insertion of that provision as per the Finance Act, 2013. That was long after the relevant period for the case in hand. Therefore, sub-section (2A) of Section 73 of the Finance Act, 1994 is of no consequence to the case in hand. The above decision of Chhattisgarh High Court was in respect of the appeal filed by assessee against Tribunal s Final Order as reported in 2014 (34) STR 358 (Tri-Del), wherein the period in dispute was 2005-06 to 2007-08 for which Show Cause Notice was issued on 10.12.2008. The Hon ble High Court in the aforesaid decision also set aside the demand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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