TMI Blog2021 (8) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... ilful and in any case, suppression has also to be with an intent to evade payment of service tax. Though, the Commissioner in the last sentence of paragraph 8.6 of the order observed that in any case, the noticee, in this case, has willfully contravened the provisions of the Finance Act , but there is no discussion or reasons given by the Commissioner for so concluding and only a bald statement has been made and that too as an alternative finding. It is not possible to sustain the finding recorded by the Commissioner that the Department was justified in invoking the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act. Also, the proposal in the show cause notice relating to recovery of amount under section 73A of the Finance Act and interest thereon under section 73B of the Finance Act has not been confirmed in the impugned order - It is not possible to accept the contention of the learned Authorised Representatives for the Department that since there was a proposal for recovery of ₹ 2,44,48,095/- under section 73A of the Finance Act in the show cause notice, the said demand can be confirmed in these proceedings, even if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice , introduced under section 65(105)(zzzza) of the Finance Act from 01.06.2007. The service tax was paid in terms of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 [ the Composition Scheme ]. 5. During the period from July 2008 to January 2009, the appellant discharged service tax of ₹ 5,31,67,272/- on works contract service, out of which ₹ 2,44,48,096/- was deposited by utilization of CENVAT credit. It is stated by the appellant that since the Composition Scheme did not bar availment of credit on capital goods and input services, the appellant availed credit on the same and the payment of service tax was also accepted by the Department without any objection. 6. However, based on audit objections raised by the Department, a show cause notice dated 17.04.2014 was issued to the appellant, proposing to deny the CENVAT credit of ₹ 2,44,48,095/- by alleging that the activity of construction of residential complexes by a builder became taxable only after the insertion of an Explanation in the definition of taxable service of construction of complex service under section 65(105)(zzzh) of the Finance Act and this service was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 095/- with interest and penalty under rule 15(3) of the Credit Rules, as well as imposition of penalty of ₹ 10,000/- under section 77(2) of the Finance Act. The relevant portion of the order passed by the Commissioner is reproduced below: 5.14.2 I find that service tax amounting to ₹ 5,31,67,272/- was collected by the noticee on construction of flats from the buyers in southern parts of India during July, 2008 to January 2009. As discussed supra, no service tax was leviable on the activity of construction of residential complex for sale to buyers by the noticee before 01.07.2010. Therefore this amount of ₹ 5,31,67,272/- collected as service tax was required to be deposited with the Govt. Exchequer in terms of the provisions of Section 73A of the Act, ibid. 5.14.3 However, I find that while making payment of such wrongly collected amount of service tax, the noticee utilized Cenvat credit of ₹ 2,44,48,095/- which was availed by them on the construction of such flats. Since these services provided by the noticee at the material time were exempt, they were not entitled for any cenvat credit of input services under the provisions of Rule 3(1) read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Service Tax even in situation where there is no intent to evade payment of tax. Even if it is presumed that the nottcee has not contravened any provisions with intent to evade payment of Service Tax, yet the noticee has failed to comply with the obligations cast upon it by the Legislature. Thera is no requirement that there should be suppression with intention to evade. Mere suppression is adequate for the purpose of the recovery of tax for the extended period as well as for imposing penalty. In any case, the noticee, in this case, has willfully contravened the provisions of the Finance Act, 1994, Service Tax Rules, 1994 and CENVAT Credit Rules, 2004. ******* 8.14 In view of the above discussions, I hold that the extended period as provided in proviso to Section 73 (1) of the Act has rightly been invoked in this case and the inadmissible Cenvat credit availed and utilized by the noticee is recoverable from them by applying provisions of Rule 14 of CCR 2004 read with Section 73(2) of the Act, as applicable. ******* 13. In view of the above discussions and findings, I make the following order: ORDER (i) I confirm that the proviso to Section 73 (1) of Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nkya Enterprises [ 2013 (294) E.L.T. 203 (Bom.) ]; (ii) During the period in dispute, the appellant paid service tax to the extent of ₹ 5,31,67,272/-, and availed credit of ₹ 2,44,48,095/-. The service tax paid by the appellant is much more than the amount of credit availed by it. Therefore, even if no service tax was payable by the appellant, there has been no loss to the Government exchequer. Thus, assuming without conceding that no service tax was payable by the appellant, since the service tax paid is a much amount than the credit availed, the payment of such tax itself is reversal of inadmissible credit and no further recovery can be made. In this connection reliance has been place on the decision of the Tribunal in CST, Delhi-IV vs. DLF Utilities Ltd. [ 2018 (6) TMI 133-CESTAT Chandigarh ]; (iii) No provision of law empowers the department to question payment of service tax, except in case of short-payment. When such payment of tax cannot be questioned, the consequential demand of CENVAT credit cannot be sustained; (iv) The extended period of limitation could not have been invoked nor interest or penalty could have been imposed; and (v) The services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horised Representatives appearing for the Department have been considered. 14. The first issue that arises for consideration is whether the Commissioner was justified in holding that the extended period of limitation contemplated under section 73(1) of the Finance Act, 1994 [ the Finance Act ] was correctly invoked in the facts and circumstances of the case. 15. The contention of the learned counsel for the appellant is that the necessary ingredients for invoking the larger period of limitation contemplated under the proviso to section 73 (1) of the Finance Act, namely wilful suppression of facts with an intent to evade payment of service tax do not exist and, therefore, the extended period of limitation could not have been invoked. 16. In order to appreciate this contention it would appropriate to reproduce section 73 of the Finance Act as it stood at the relevant time. This section deals with recovery of service tax not levied or paid or short levied or short paid or erroneously refunded. It is as follows; 73.(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, withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intent to evade payment of service tax, by the person chargeable with the service tax, the provisions of the said section shall have effect as if, for the word one year , the word five years has been substituted. 20. Learned counsel for the appellant submitted that the payment of service tax by the appellant on works contract services and availment of CENVAT credit was duly reflected by the appellant in the ST-3 returns and once such necessary details were reflected in the statutory returns, it cannot be urged that the appellant had suppressed facts. Even otherwise, learned counsel submitted, that suppression has to be wilful with an intent to evade payment of service tax, if the extended period of limitation has to be invoked by the Department, but the Commissioner observed that it would be possible to invoke the extended period of limitation even in a situation where there is no intent to evade payment of service tax. 21. Learned Authorised Representatives appearing for the Department have, however, supported the finding recorded by the Commissioner in the impugned order that the extended period of limitation contemplated under the proviso to section 73(1) of the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collusion; or (c) any wilful misstatement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act of the rules made thereunder with intent to evade payment of duty by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant dated, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under Section 11AA and a penalty equivalent to the duty specified in the notice. 26. In Pushpam Pharmaceuticals Company, the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he must have done, does not render it suppression. 27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bombay [1995 Suppl. (3) SCC 462], we find that suppression of facts can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty. When facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made herein above that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it was not open to the Central Excise Officer to proceed to recover duties in the manner indicated in proviso to Section 11A of the Act. (emphasis supplied) 28. These two decisions in Pushpam Pharmaceuticals and Anand Nishikawa Company Ltd. were followed by the Supreme Court in the subsequent decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omission or mere failure to pay duty or take out a license without the presence of such intention. xxxx The Revenue has not been able to prove an intention on the part of the Appellant to avoid tax by suppression of mention facts. In fact it is clear that the Appellant did not have any such intention and was acting under a bonafide belief. (emphasis supplied) 31. It would also be useful to refer to a decision of the Tribunal in Shiv-Vani Oil Gas Exploration Services Ltd. vs. C. S. T., New Delhi [ 2017 (47) STR 200 (Tri-Del.) ], wherein the Tribunal after making reference to the decision of the Supreme Court in Cosmic Dye Chemical vs. CCE, Bombay [ 1995 (75) E.L.T. 721 (SC) ], observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoked. The observations are as follows: 8 . Regarding the demand for extended period, we find the reason given by the Original Authority is not legally sustainable. In fact he recorded that in terms of proviso to Section 73 of Finance Act, 1994, the intention to evade payment of duty is not required to invoke extended period or to impose penalty. We find that for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or reasons given by the Commissioner for so concluding and only a bald statement has been made and that too as an alternative finding. 33. Thus, for all the reasons stated above, it is not possible to sustain the finding recorded by the Commissioner that the Department was justified in invoking the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act. 34. The submission advanced by the learned Authorised Representatives by the Department that even if it were to be held that the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act could not be invoked, then too the demand can be confirmed under section 73A of the Finance Act now needs to be examined. 35. Learned counsel for the appellant submitted that the proposal in the show cause notice to demand an amount representing service tax under section 73A of the Finance Act has been dropped by the Commissioner in the impugned order, which order has attained finality in the absence of any cross appeal by the Department, and so this contention is not available to the Department. 36. To appreciate this submission it will be appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X
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