TMI Blog2023 (3) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... pression of facts indulged in by the respondent. At Paragraph No. 10 of the first show cause notice, the Department only states that it appears from the correspondence referred to therein that the respondent has wilfully suppressed facts from the Service Tax Department with an intention to evade payment of service tax. It does not specify any material particulars of how wilful misstatements or suppression of facts has been indulged in by the respondent or in what manner the acts of the respondent are wilful or with an aim to evade tax. In Cosmic Dye Chemical [ 1994 (9) TMI 86 - SUPREME COURT ], the Hon'ble Supreme Court has also considered a similar issue on the question of what constitutes fraud, collusion or wilful misstatement or suppression of facts for the purpose of invocation of the extension of period of limitation under section 11-A of the Excise Act, where it was held that [ 1994 (9) TMI 86 - SUPREME COURT ] - From a reading of the decision of the Hon'ble Supreme Court, it would be incumbent upon the appellant to demonstrate from the correspondence / material on record or on the specific averments made in the first show cause notice, as to how the respondent ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder in original dated 02/05/2018, passed by the Principal Commissioner of the GST, Mumbai, East Commissionerate which has made a demand of service tax amounting to Rs.75,22,81,847/- for the period 1st July, 2012 to 31st March, 2015 under Section 73 (2) of the Finance Act, 1994, with a further demand of interest under Section 75 of the Finance Act, 1994 on the amount of service tax demanded, in addition to which penalty of Rs.75,22,81,847/- has been imposed on the respondent in terms of Section 78 of the Finance Act, 1994; the order dated 02/05/2018 of the Commissioner further imposed a penalty of Rs.10,000/- from the respondent for not filing proper returns under Section 70 of the Finance Act, 1994 and further confirmation of the demand of service tax from the respondent amounting to Rs.55,07,78,305/- for the period October, 2012 to September, 2013 under Section 73(2) of the Finance Act, 1994 along with interest under Section 75 of the said Act and further penalty of Rs.10,000/- for not filing proper returns under Section 70 of that Act. It has also imposed penalty of Rs.5,50,77,830/- equivalent to 10 % of the sales tax amount in terms of provisions of Section 76 r/w Section 78 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 11, Section 14 and Section 25 of SEBI Act, the nature of the statutory functions of the respondent was not one in which it provided any service in terms of the Goods and Services Act and there was no quid pro quo or service provided for a fee, in relation to various entities required to be registered with the respondent under the SEBI Act. The further contention raised by the respondent in its communication, was that there was no element of contractual relationship in the nature where its activity was undertaken for a consideration, and such activity being statutory in nature and not for consideration or fee, it was not liable to levy Service Tax. It is further its contention that the fee received by the respondent being one of compulsory nature as mandated by its controlling statute, the SEBI Act, the respondent was neither liable to register itself as a service provider nor could any service tax be levied on the respondent. The respondent by letter dated 17/12/2013 made a detailed representation to the Department of Revenue, Ministry of Finance, Government of India setting out its various contentions as stated above, which would entitled it to be exempted from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, on 04/06/2015 provided the details of the fees collected by it under the Statute from July, 2012 to December, 2014; on 07/09/2015, the Commissioner issued a demand for details of fees collected by the respondent from January, 2015 to June, 2015 along with a legal opinion, if any, which may have been obtained by the respondent on the question of taxability of the respondent's activities under Service Tax. Accordingly, the respondent submitted all the relevant details along with a legal opinion obtained by it, to the appellant. f] On 17/03/2016, the Commissioner issued show cause notice (hereinafter referred to as first notice ) directing the respondent to show cause why service tax amounting to Rs.75,22,81,847/- for the period July, 2012 to March, 2015 under Section 73 of the Finance Act, 1994 r/w Rule 6 of Service Tax Rules, 1994, along with penalty under Section 76 of the Finance Act, 1994, interest applicable at rates under Section 75 thereof and penalty under Section 77 for failure to obtain registration, and also for penalty under Section 78 of the said Act for suppression of facts, should not be paid by the respondent. g] On 12/01/2018, the respondent filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03/2016. It is the contention of the appellant that the finding of the Commissioner in the original order, that the respondent was well aware of its liability to pay service tax, and on the facts of the present case, has indulged in wilful suppression of facts, with an intent to evade payment of tax, and therefore, the extended period of limitation under Section 73 (1) of the Finance Act, 1994 had been correctly invoked by the original authority. It is, further the submission of the appellant that the Commissioner has correctly applied the judgment rendered by CESTAT in the case of Star India Pvt. Ltd. Vrs. Commissioner of Central Excise, Thane-I, reported in 2015 (038) STR 0884 TRI-Bom to hold that the invocation of the extended period of limitation for confirmation of the demand was justified in the facts of this case. 6. Per contra, learned Senior Advocate Shri Darius Shroff took us through the scheme of the SEBI Act, more particularly through the definition of the word fund under Clause (d) of Section 1, Section 3, Section 11, Section 13, Section 14 and Section 15 of that Act to contend that SEBI was a statutory Body, empowered by the SEBI Act to collect certain fees a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention that there was no wilful misstatement or suppression of facts for invocation of the extended limitation period; a] 2015 SSC OnLine SC 1396 [Jayant Juneja Vrs. Commissioner of Central Excise, Jaipur] b] (2007) 7 SCC 490. [Commissioner of Central Excise, Mumbai-IV Vrs. Damnet Chemicals Pvt. Ltd. and others.] c] (1995) 6 SCC 117 [Cosmic Dye Chemical Vrs. Collector of Central Excise, Bombay]. d] (1989) 2 SCC 127 [Collector of Central Excise, Hyderabad Vrs. M/s. Chempher Drugs and Liniments, Hyderabad]. 7. On perusing the impugned order of the CESTAT, we note that though the respondent has raised grounds in its appeal before the Tribunal, that it being a statutory authority, and performing sovereign functions, it was not liable to pay tax, the Tribunal, at Paragraph Nos. 23, 24 and 25 of the Judgment has specifically refrained from ascertaining the legality of the claim raised by the respondent on this issue. It is thus, clear that CESTAT has refrained from arriving at any finding based upon the respondent's claim that it was performing a sovereign function or acting as Regulatory under the SEBI Act or on the contention that the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he face of it be barred by limitation prescribed under Sub-section (1) of Section 73. The proviso to sub-section (1) of Section 73, however, allows for the extension of the period of limitation of one year upto five years, only in the event of the Assessee not paying service tax for reasons of fraud or collusion or wilful misrepresentation or suppression of facts or in contravention of any of the provisions of Chapter-V of the Finance Act, 1994. 10. In the present case, Paragraph Nos. 7 to 9 of the show cause notice dated 17/03/2016 refers to all the correspondence between the respondent and the Commissioner. However, it does not refer to any specific instances of fraud, collusion, misstatement or suppression of facts indulged in by the respondent. At Paragraph No. 10 of the first show cause notice, the Department only states that it appears from the correspondence referred to therein that the respondent has wilfully suppressed facts from the Service Tax Department with an intention to evade payment of service tax. It does not specify any material particulars of how wilful misstatements or suppression of facts has been indulged in by the respondent or in what manner the acts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been conscious or deliberate withholding of information by the assessee. There has been no wilful misstatement much less any deliberate and wilful suppression of facts. It is settled law that in order to invoke the proviso to Section 11-A(1) a mere misstatement could not be enough. The requirement in law is that such misstatement or suppression of facts must be wilful. We do not propose to burden this judgment with various authoritative pronouncements except to refer the judgment of this Court in Anand Nishikawa Co. Ltd. V. CCE wherein this Court held : (SSC p. 759, para 27) 27. ... 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 and not that he must have done, would not render it suppression. It is settled law that mere failure to declare does not amount to wilful suppression. There must be some positive act from the side of the assessee to find wilful suppression. 27. It is clear from the material available on record that the Excise Authorities had inspected th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11-A. Misstatement or suppression of fact must be wilful. 13. In Collector of Central Excise, Hyderabad Vrs. M/s.Chemphar Drugs and Liniments, Hyderabad (supra), the Hon'ble Supreme Court held in Paragraph Nos.8 and 9 thus :- 8. On the aforesaid view the Tribunal came to the conclusion that the demand raised on this for a period beyond 6 months was not maintainable. 9. Aggrieved thereby, the revenue has come up in appeal to this Court. In our opinion, the order of the Tribunal must be sustained. In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section (1) of Section 11-A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has arrived at a specific finding that from the disclosures made in the correspondence and the documents on record, no motive could be attributed to the respondent in any manner acting fraudulently or by making wilful statement or suppressing any facts. There is also a specific finding recorded by the CESTAT that there is no allegation in the first show cause notice or suppression of facts or misrepresentation by the respondent. 15. At Paragraph No. 28 of its Judgment, the CESTAT noticed that the issue of tax on the fees charged by the respondent was laid down in the correspondence with the Tax Administration as well as with various Government Authorities within a few months of the transition to the Negative List regime. It further records a finding of fact that after considering the record, the jurisdictional tax authority was cognizant of the non-payment and for the reasons for such non-payment by the respondent, well before the normal period of limitation had lapsed. It further records a finding that there was no justification for the delay on the part of tax authorities in issuing the show cause notice when it was aware of the representation made by the respondent to the Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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