TMI Blog2023 (7) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... dings 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 would also be useful to refer to a decision of the Tribunal in M/S. SHIV-VANI OIL GAS EXPLORATION SERVICES LTD. VERSUS CST, NEW DELHI [ 2016 (10) TMI 878 - CESTAT NEW DELHI] , wherein the Tribunal after making reference to the decision of the Supreme Court in COSMIC DYE CHEMICAL VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY [ 1994 (9) TMI 86 - SUPREME COURT] , observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoked. Various 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 sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods manufactured by the appellant; (v) The appellant purchased the raw material, packing material and consumable in its name for manufacturing the goods; (vi) Pursuant to the sale of goods by the appellant, the appellant discharged the central sales tax; and (vii) Under the Agreement, UBL merely authorized the appellant to use the brand name and the recipe of the goods and sell them in exchange of a brand fee . 5. The impugned order holds that the appellant has not been conferred with the title of the goods nor it has been granted the right of ownership of the goods belonging to UBL and, therefore, even if the goods were removed on the invoices of the appellant, the entire proceeds were being deposited and controlled by UBL only. 6. Shri Tarun Gulati, learned senior counsel for the appellant assisted by Shri Abhishek Jaju and Shri Mihir Turakhia, contended that the nature of the operations carried out by the appellant was that of pure manufacturing and the appellant purchased the goods for itself and not for, or on behalf of UBL. Learned senior counsel, therefore, contended that this activity cannot be subjected to service tax under the category of BAS. Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esult in lack of adherence to essential principles of justice. Also, As mentioned in the submissions above, the noticee in all times was under the interpretation that since the arrangement is purely a manufacturing agreement, there can be no levy of Service Tax, and rightly so, being the manufacturing activity, the noticee was not liable to pay tax on the same. Now, adding further to the fact that the notice in all times was under the actual belief of manufacturing operations, there was no question of levying Service tax at all, thus there can be no case of 'Short' payment as there has to be no payment in itself of tax at all, and therefore there can be no allegation as to fraud on part of the Noticee. 11. The Commissioner, however, found that the appellant with mala-fide intention distorted the facts by way of willful misstatement, suppression of facts and in contravention of the provisions of the Finance Act 1994 with intent to evade payment of the service tax and the relevant findings are as follows: 73. From the above discussions, I find that M/s. MEBL s contentions do not hold any ground and it is clear that MEBL are providing various services in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 25.07.2012 Extended period 13. It would seen from a perusal of the show cause notice that it proceeds on the footing that the appellant provided BAS and, therefore, non-declaration of such fact would amount to suppression of facts with intent to evade payment of the service tax. The contention of the appellant is that it never rendered BAS and, therefore, disputed the liability to pay service tax. The amendment in the definition of BAS w.e.f. 01.09.2009 resulted in confusion regarding the liability of service tax on manufacture of alcoholic beverages in the industry. The amendment introduced a new levy which created doubts on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the service tax which has not been levied or paid, requiring him to show cause why he should not pay amount specified in the notice. 19. The relevant date has been defined in section 73 (6) of the Finance Act as follows; 73(6) For the purpose of this section, relevant date means,- (i) In the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short paid- (a) where under the rules made under this Chapter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 observations are as follows; 4. Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. 25. The Supreme Court in Continental Foundation Joint Venture Holding vs. Commissioner of Central Excise, Chandigarh-I 2007 (216) E.L.T. 177 (SC) also held: 10. The expression suppression has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or collusion and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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, will show that the ingredient of mala fide is a pre-requisite to invoke both the legal provisions (proviso to Section 73 and Section 78). The Original Authority recorded that it may be true that the assessee has not contravened any provisions with intend to evade payment of service tax, however, he proceeded to confirm the demand for extended period and to impose penalty of an equal amount under Section 78. We find that Hon ble Supreme Court in Cosmic Dye Chemical v. CCE, Bombay reported in 1995 (75) E.L. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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