TMI Blog2022 (6) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... inding in this case that there was no suppression of facts. However, the confirmation of demand has not been assailed by the respondent, possibly because it was entitled to the CENVAT credit of whatever service tax it paid. Hence, we cannot modify the impugned order with respect to the confirmation of the demand. Thus, invoking section 80 to waive the penalties was correct and invoking extended period of limitation for confirmation of demand was not. In the case of Mahindra Mahindra, a larger bench of Supreme Court clarified the position of law regarding invocation of larger period of limitation alleging suppression of facts in cases where there is revenue neutrality. It would be essential to examine the background. In the case of AMCO BATTERIES LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, BANGALORE [ 2003 (2) TMI 66 - SUPREME COURT] the charge of suppression of facts was dismissed on the ground of Revenue neutrality. A question may arise that if it is found that the elements necessary to invoke extended period of limitation were not available and therefore, Revenue could not have demanded duty for an extended period, can the respondent seek refund of the service tax so paid v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng authority invoked section 80 and dropped the entire amount of penalty as proposed in the SCN and ordered for appropriation of the amounts paid towards service tax and interest. Hence the present appeal by the Revenue assailing non-imposition of penalties invoking section 80. According to the Revenue, the Commissioner was not correct in dropping the penalties invoking section 80 because, this can be invoked only if the assessee proves that there was reasonable cause for the failure. It cannot be said that there was a reasonable cause for failure for the following reasons: a) The demand in the present case was made invoking extended period of limitation under the proviso to section 73(1) and the reasons for invoking the extended period were indicated in the SCN and the demand was also confirmed by the Commissioner invoking extended period of limitation. Having confirmed the demand invoking extended period of limitation, the Commissioner has, in paragraph 18 of the impugned order, held that there was no suppression of facts and dropped the imposition of penalties which is not correct. b) The finding of the Commissioner in paragraph 14 of the impugned order that the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee proves that there was reasonable cause for the said failure. Revenue s contention is that the impugned order was not correct because it has, on the one hand, correctly confirmed the demand invoking extended period of limitation which requires suppression of facts to be established and on the other hand, has dropped the proposal to impose penalties invoking section 80 holding that there was reasonable cause for the assessee s failure by the assessee (respondent). In this regard, we find that the issue whether there was suppression of facts or not and whether the penalty under section 78 is mandatory or not having regard to the facts of the case and also that the Respondent is a PSU and that the amounts were payable under Reverse Charge Mechanism (RCM) and would have otherwise been eligible as Cenvat credit to the Respondent, is to be decided. 4. We find that the present issue involved in this appeal is no more resintegra in view of the decision of the Tribunal in the case of BhorukaAluminium Limited Vs. CCEx. S.Tax, Mysore reported in 2017 (51) STR 418 (Tri.Bangalore) . The relevant para of the said decision are reproduced below : 4. The learned counsel for the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be issued. In this case, I find that the contention of the appellant that he bona fidely believed that he is not liable to pay service tax but during the audit, the audit party informed him that he is liable to pay service tax, then he immediately paid the entire service tax along with interest. Except mere allegation of suppression, the Department did not bring any material on record to prove that there was suppression and concealment of facts to evade payment of tax. Consequently, in my opinion, the imposition of penalty under Section 78 of the Act is not justified and bad in law. Moreover, in the impugned order, the learned Commissioner (Appeals) has not recorded any finding on suppression of facts by the appellant with an intention to evade tax. In view of the above discussion, I set aside the impugned order by allowing the appeal of the appellant. 5. We find that the facts of the present case are squarely covered by the aforesaid decision of the Tribunal. The question which arises is since the Commissioner has confirmed the demand invoking extended period of limitation and took a contrary view when it comes to invoking section 80, which view is correct. Can there be suppr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has not paid the service tax on its own and it was paid only after it was pointed out by the officers during investigation.We agree and the respondent assessee has paid the service tax not on its own but after it was pointed out by the DGCEI. This does not prove that the respondent had suppressed facts. It could have declined to pay service tax for the extended period of limitation but it paid the service tax anyway and also CENVAT credit of the service tax so paid as it was entitled to. 9. It has been submitted on behalf of revenue that Revenue neutrality cannot be the basis to determine if there was suppression of facts or not. Reliance was placed on CCE Mumbai vs Mahindra Mahindra, DharmpalSatyapal and IFB Industries Ltd. We proceed to examine this proposition and the case laws relied upon. 10. In the case of Mahindra Mahindra, a larger bench of Supreme Court clarified the position of law regarding invocation of larger period of limitation alleging suppression of facts in cases where there is revenue neutrality. It would be essential to examine the background. In the case of AMCO Batteries Ltd. [2003 (153) E.L.T. 7 (S.C.)] the charge of suppression of facts was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms. 11. In the case of DharmpalSatyapal, the assessee was manufacturing the goods but had not obtained central excise registration and had not disclosed the manufacture at all. Before the Supreme Court, it was submitted on its behalf that the assessee was entitled to claim proforma credit/ modvat credit. However, no record on credit entitlement was produced. The Supreme court held that the assessee failed to prove its bonafides. Relevant paragraphs of this judgment are below. 24 . We do not find any merit in these submissions. As stated above, the adjudication in this case was confined to the question of excisability and concealment of the existence of two units in which the compound (kimam) was manufactured. No explanation has been given by the assessee for not disclosing the affairs of these units, particularly when the assessee was in business for couple of years and when the assessee had been dealing with other traders who operated from licensed factories. It was for the assessee to explain the reasons for not getting the units registered or licensed. It was for the assessee to explain its failure to maintain the records under the 1944 Act and rules thereunder. In eac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... landestine manufacture and removal of the compound (kimam) from the two unlicensed/unregistered units at 96, Okhla Industrial Estate, Phase-III, New Delhi/E-1, Maharani Bagh, New Delhi, we do not find any infirmity in the impugned judgment. 27 . Accordingly, these civil appeals filed by the assessees are dismissed with no order as to costs. 12. In the case of IFB Industries Ltd., the appellant was transferring goods at a lower value to its own sister concern in Bhopal and never disclosed such invoices to the Revenue. It s plea that whatever duty it paid would be available to its sister unit in Bhopal and hence it was a revenue neutral situation and the longer period of limitation cannot be invoked was not accepted by the Tribunal relying on the judgment of the larger bench of Supreme Court in the case of Mahindra Mahindra (supra). The relevant portions of the order are as follows: 4 . The appellants have also challenged the above order on the point of limitation, inasmuch as the show cause notice was issued after the normal period of limitation. However, on being queried, the ld. Advocate fairly agreed that the invoices showing the lower value in case of transfer to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue and it is for the Revenue to prove the existence of any of these elements. Evidently, each of these factors, such as fraud, collusion, suppression of facts, require also an intention to evade. It is a well settled legal position that suppression is not mere omission (which could also be careless or negligent) but a positive act of suppression. The qualifying clause makes it abundantly clear that there must be an intent to evade payment of duty. The existence of such an intent can only be inferred from the facts of every case. 15. It is in this context, the background of the assessee may also assume significance. We find it significant that the respondent is a public sector undertaking which is one of the factors to consider if it hadan intent to evade payment of duty. Another factor which weighed in our conclusion is the fact that the respondent was to gain nothing by evading. It is not a case that somebody else would get CENVAT credit but the respondent itself would pay with one hand and immediately take credit of the service tax so paid. As per the judgment of AMCO as further clarified in Mahindra Mahindra, this is a very significant factor in the present case to estab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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