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TMI Blog2023 (7) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... use notice dated 04.07.2014 was issued to the appellant for the period from September 2009 to June 2012 alleging that the transaction between the appellant and UBL would be taxable under the category of BAS as defined under section 65(19) and made taxable under section 65(105)(zzb) of the Finance Act, 1994 the Finance Act. 3. The appellant filed a reply to the show cause notice and denied the allegations made in the show cause notice. The Commissioner, however, by order dated 21.08.2018 confirmed the demand of service tax with interest and penalty. 4. According to the appellant, the parties had agreed that: (i) The appellant would manufacture the goods on principal to principal basis; (ii) Under clause 6 of the Agreement, UBL authorized the appellant to produce the goods and sell the same in the State of Madhya Pradesh or export it out of the State; (iii) The appellant had the sole authority and responsibility to procure the required raw materials and convert them into finished goods; (iv) Under clause 6.3 of the Agreement, UBL undertook to purchase itself or through its nominees the entire quantity of the goods manufactured by the appellant; (v) The appellant purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of limitation could not have been invoked, the demand would have to be set aside. 9. For this purpose it would be necessary to examine the allegations made in the show cause notice for invoking the extended period of limitation. After noting that the appellant was providing BAS w.e.f. 23.09.2009 and the exclusion from BAS would be applicable only if the activity results in "manufacture" of "excisable goods", the show cause notice proceeds to state that the appellant appeared to have contravened the provisions of Chapter V of the Finance Act by reason of fraud, suppression of facts and willful mis-statement with an intent to evade payment of service tax. 10. The appellant filed a reply to the show cause notice and in relation to the invocation of the extended period of limitation pointed out as follows: "53. That it is quite strongly established from the submissions in the foregoing paragraphs that the matter relates to a interpretative difference and as a matter of fact the appellant has always been genuine in their practices, thus treating the same as a penal offence would certainly result in lack of adherence to essential principles of justice. Also, As mentioned in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lful misstatement, suppression of facts and in contravention of provisions of the Finance Act 1994 with intent to evade payment of Service Tax. (emphasis supplied) 12. It would be seen that the entire period from September, 2009 to June, 2012 falls in the extended period of limitation as the normal period was of one year from 01.09.2009 upto 28.05.2012 and eighteen months from 29.05.2012 to 30.06.2012. The following chart would clearly depict the factual portion: Period Normal period of limitation as per section 73 of the Finance Act Whether notice issued within normal or extended period 01.09.2009 to 31.12.2009 One year from the relevant date - 25.01.2009 Extended period 01.01.2010 to 30.06.2010 One year from the relevant date - 25.07.2010 Extended period 01.07.2010 to 31.12.2010 One year from the relevant date - 25.01.2010 Extended period 01.01.2011 to 30.06.2011 One year from the relevant date - 25.07.2011 Extended period 01.07.2011 to 31.12.2011 One year from the relevant date - 25.01.2012 Extended period 01.01.2010 to 28.05.2012 One year from the relevant date - 25.07.2012 Extended period 29.05.2012 to 30.06.2012 18 months from the relevant date - 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 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, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: PROVIDED that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "one year", the words "five years" had been substituted." 18. It would be seen from a perusal of sub-section (1) of section 73 of the Finance Act that where any service tax has not been levied or paid, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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." 22. 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 is in this context that the Supreme Court observed that since "suppression of facts" has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. The obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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) 24. These two decisions in Pushpam Pharmaceuticals and Anand Nishikawa Company Ltd. were followed by the Supreme Court in the subsequent decision in Uniworth Textile Limited vs. Commissioner of Central Excise, Raipur 2013 (288) E.L.T. 161 (SC) and the observation are: "18. We are in complete agreement with the principal enunciated in the above decisions, in light of the proviso to section 11A of the Central Excise Act, 1944." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acting under a bonafide belief." (emphasis supplied) 27. 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 invoking extended period as well as for imposing penalty under Section 78, the legal provisions are identical. The words used like fraud, collusion, willful mis-statement, suppression of fact or contravention of any provisions of Chapter V of Finance Act, 1994 or of the Rules made thereunder with intent to evade the payment of Service Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so to Section 73(1) of the Act is not applicable. The facts of the present case indicate that MTNL had made the receipt of compensation public by reflecting it in its final accounts as income. As stated above, merely because MTNL had not declared the receipt of compensation as payment for taxable service does not establish that it had willfully suppressed any material fact. MTNL's contention that the receipt is not taxable under the Act is a substantial one. No intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return." (emphasis supplied) 29. As noticed above, these factors have not been examined by the Commissioner in the impugned order and a conclusion has merely been drawn that because there was suppression of facts by the appellant, the suppression was with an intent to evade payment of service tax. 30. The impugned order holding that the extended period of limitation has been correctly invoked, therefore, cannot be sustained and is set aside. 31. It would, in such circumstances, not be necessary to examine the issues on merits that have been raised by the learned counsel for the appellant. 32. Thus, for all the reasons stated above, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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