TMI Blog2024 (1) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... how cause notice or a finding in the impugned order that a particular fact had not been disclosed since all that has been stated is that the appellant was not entitled to take CENVAT credit but as it had taken, it suppressed material facts from the department. It has been settled by the Supreme Court and the Delhi High Court that mere suppression of facts is not enough and there must be a deliberate and wilful attempt on the part of the assessee to evade payment of service tax. In the absence of any intention to evade payment of service tax, which intention should be evident from the materials on record or from the conduct of the assessee, the extended period of limitation cannot be invoked. The inevitable conclusion that follows from the aforesaid discussion is that the appellant had not suppressed facts, much less suppressed facts with an intention to evade payment of service tax. The extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act, therefore, could not have been invoked in the facts and circumstances of the present case. The impugned order dated 12.12.2014 passed by the Commissioner disallowing CENVAT credit taken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted by the Delhi Metro and a letter of acceptance dated 21.01.2008 was issued. Reliance Infrastructure Limited promoted a Special Purpose Vehicle , namely, the appellant as its subsidiary for becoming a concessionaire for the Project. The request of the consortium was accepted by Delhi Metro and a Concession Agreement dated 25.08.2008 was entered into with the appellant for execution of the Project on Build-Operate-Transfer basis. The design and construction of the basic civil structure for the Project was done by Delhi Metro and it was made available to the appellant progressively for design, supply, installation, commissioning and operation of the system and related work. The appellant was granted the concession by the Delhi Metro for a period of 30 years in respect of the Airport Metro Express Line and it included the exclusive right, license and authority to develop, design, engineer, finance, procure, construct, commission and test the Project Systems and the required buildings for reliable commercial operation of the Project. Upon completion of the Airport Metro Express Line, the appellant was also required to manage, operate and maintain the Project as a commercial ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01,43,929/-. The appellant also claims that as it was providing both taxable and non-taxable/exempt services and was not maintaining separate record of the receipt, the appellant was required to reverse Rs. 2,34,20,287 (being 7% of the exempt/non-taxable turnover of Rs. 33,45,75,530) in terms of rule 6(3)(i) of the Credit Rules. However, in March 2012, out of the total CENVAT credit availed in the ST-3 returns to the extent of Rs. 65,01,43,929/-, the appellant reversed an amount of Rs. 23,88,03,177/- during investigation. 10. A show cause notice dated 20.07.2012 was, however, issued to the appellant raising a demand for the period October 2009 to March 2011. The show cause notice mentions that an audit was conducted on 22.09.2010 and 23.09.2010 by the Officers of the Service Tax Commissionerate, New Delhi. Paragraph 13 of the show cause notice gives details of the CENVAT credit availed by the appellant on the basis of the original ST-3 returns and the revised ST-3 returns, and they are as follows: CENVAT Credit taken as per original ST-3 returns TABLE-I Period Opening Balance Inputs Capital Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54,05,97,026/- 1,92,00,475/- 6,42,40,058/- 65,01,43,929/- *(Rs. 1,39,050/- debited during audit) 11. Paragraph 14 of the show cause notice mentions that on scrutiny of the revised ST-3 returns for the period (i) October 2009 to March 2010, (ii) April 2010 to September 2010 and (iii) October 2010 to March 2011, it was observed that the appellant had availed CENVAT credit amounting to Rs. 65,01,43,929/- and the details have been summarized in Table III which is as follows: TABLE-III Particulars CENVAT credit taken on Inputs CENVAT credit taken on Capital goods CENVAT credit taken on Input Services CENVAT shown by wrong opening Balance, Closing Balance and wrong totaling CENVAT credit closing balance as on 31.03.2011 As per original ST-3 returns 32,31,15,993/- NIL 5,87,85,431/- 24,35,87,403/- 62,54,88,827/- As per revised ST-3 returns 54,05,97,026/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice i.e advertisement renting of space services mentioned at S.No. 2 3 of Para 9 and thus the assessee is not eligible to avail CENVAT Credit on the above goods as inputs. Whereas in view of above, it appears that above mentioned goods on which CENVAT Credit as inputs has been taken were exclusively used in exempted service only. (emphasis supplied) 14. Paragraph 18.1 of the show cause notice gives reasons as to why CENVAT credit in respect of input services amounting to Rs. 6,42,40,058/-, as shown in Table III, would be inadmissible and it is reproduced below: 18.1 Whereas during the year 2009-10 the assessee had paid service Tax amounting to Rs. 3,53,94,538/- and in year 2010-11 paid the service tax amounting to Rs. 2,88,55,520/- totaling to Rs. 6,42,40,058/- as recipients of Banking and Financial Service and 'Consulting Engineering services' under Section 66A of the Act ibid under reverse charge mechanism. These services were used in commissioning, operation and maintenance of Airport Metro Express Line which is an exempt service. However they have claimed CENVAT credit so paid in contravention of CCR, 2004. 15. Paragraph 20 of the show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndency of the appeal. 19. This appeal seeks the quashing of the order dated 12.12.2014 passed by the Commissioner. 20. Shri Prakash Shah, learned counsel for the appellant made the following submissions: (i) The extended period of limitation could not have been invoked in the facts and circumstances of the case and since the entire demand is barred by limitation, the impugned order deserves to be set aside on this ground alone. In this connection, learned counsel pointed out that the availment of credit was reported by the appellant in the ST-3 returns filed post the commencement of the audit and even after the completion of the audit. During the course of audit, all the relevant facts had been considered by the audit team and, therefore, once the Department was aware of the entire facts, the show cause notice could have been issued within the stipulated period of one year; (ii) As the entire case against the appellant is based on the amount of CENVAT credit disclosed in the ST-3 returns filed by the appellant, it cannot be alleged that the appellant had suppressed facts with an intent to evade payment of service tax; (iii) There is no finding in the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther the own commercial interest of the appellant and not for providing any alleged services to Delhi Metro. The capital goods, inputs and input services on which CENVAT credit of Rs. 65,01,44,057/- was taken, have gone into providing works contract service on build, operate and maintain Delhi Airport Metro Service, which is non-taxable. The availment of CENVAT credit was, therefore, wrong and the appellant had rightly reversed the credit. Learned authorised represented also submitted that the extended period of limitation had been correctly invoked and in this connection placed the findings recorded by the Commissioner. 22. The submissions advanced by the learned counsel appearing for the appellant and the learned authorized representative appearing for the Department have been considered. 23. The first issue that arises for consideration is as to whether the extended period of limitation under the proviso to section 73(1) of the Finance Act could have been invoked in the facts and circumstances of the case, for if this issue is decided in favour of the appellant it would not be necessary to examine the other issues on merits. 24. In order to appreciate this issue it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comply with the statutory provisions and to furnish the information/documents as required thereunder. As discussed, supra, the assessee despite providing the exempted/non-taxable service has taken inadmissible CENVAT Credit on inputs/capital goods/input services which were used exclusively in such non-taxable service. It is needless to recapitulate that this case has arisen out of the audit conducted by the officers of Service Tax Commissionerate, New Delhi. The party deliberately availed the Cenvat credit in respect of exempted service . The case laws relied upon by the party are not applicable to the present facts circumstances of the case as in this case it was conscious act of availing huge amount of inadmissible Cenvat credit and suppression thereof with an intent to evade payment of duty. Had the Department not conducted the audit, the inadmissible availment of such CENVAT Credit by the assessee would not have been unearthed. Hence, the assessee has suppressed the material facts intentionally from the department. Accordingly, I hold that the extended period of limitation is very well applicable in this case in terms of proviso to Section 73 (1) of the Finance Act, 1944 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation/finding in respect of suppression. There is also no finding in the impugned order about any positive evidence of intent to evade payment of service tax and on the contrary, the suo-motu reversals by the appellant prove the bona-fides of the appellant. Merely because a particular fact was unearthed during an audit cannot lead to an inference that the assessee is guilty of suppression. Learned counsel also submitted that the appellant had claimed CENVAT credit under a bona-fide belief that it was legally entitled to claim the same and the issue involves interpretation of law. Thus, when the question involved is of legal interpretation, there cannot be any suppression or mis-statement or mala fide intention. 27. Learned authorised representative appearing for the department, however, supported the invocation of the extended period of limitation and in this connection extensively referred to the findings recorded by the Commissioner. Learned authorised representative pointed out that the appellant had deliberately availed CENVAT credit to which it was not entitled and, therefore, the appellant suppressed facts with intent to evade payment of service tax. Learned authorised rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for filing the returns can safely be taken as a date on which the ST-3 returns were filed. 33. The details of the ST-3 returns filed by the appellant for the period (i) October 2009 to March 2010 (ii) April 2010 to September 2010, and (iii) October 2010 to March 2011 covered by the three half yearly returns are as follows: Year Quarter Period Last date for filing return 2009-10 2 October 2009 to March 2010 25th April 2010 2010-11 1 April 2010 to September 2010 25th October, 2010 2010-11 2 October 2010 to March 2011 25th April, 2011 34. The show cause notice was issued to the appellant on 20.07.2012. It was, therefore, issued beyond one year from the date of filing of the last return for the period October 2010 to March 2011 on 25.04.2011. Thus, the entire period covered by the show cause notice is beyond one year. 35. Out of the aforesaid three ST returns, the returns for the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt to accept the contention of the department that since the appellant had suppressed information, the department could take recourse to the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act. 39. A Division Bench of the Tribunal in M/s G.D. Goenka Private Limited vs. The Commissioner of Central Goods and Service Tax, Delhi South [ Service Tax Appeal No. 51787 of 2022 dated 21.08.2023 ] examined a similar situation and observed that if all the relevant facts required to be disclosed have been disclosed in the ST-3 returns, then non-furnishing of information that is not required to be mentioned would not amount to suppression of facts and the relevant observations are: 17. The argument that the appellant had not disclosed in its returns that it was availing and using ineligible CENVAT credit also deserves to be rejected. The appellant cannot be faulted for not disclosing anything which it is not required to disclose. Form ST-3 in which the appellant is required to file the returns does not require details of the invoices or inputs or input services on which it availed CENVAT credit and the appellant is not required to and hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods and partly for dutiable final products, the entire CENVAT credit of duty paid on capital goods would be available. 42. The Delhi High Court in Mahanagar Telephone Nigam Ltd. vs. Union of India and others [W.P. (C) 7542 of 2018 decided on 06.04.2023 ] observed that where there is a substantial dispute as to whether the service is taxable or not, then non-disclosure of the same in the service tax return would not amount to suppression of material facts. The relevant observations are: 34. xxxxxxxx. Mere non-disclosure of a receipt, which a party believes is not chargeable to service tax, in the service tax returns, would not constitute suppression of facts within the proviso to Section 73(1) of the Act, unless it is, ex facie, clear that the receipt is on account of taxable services or it is unreasonable for any assessee to believe that the receipt does not fall in the net of service tax. In cases where there is a substantial dispute as to whether receipt of any amount is on account of taxable service as in the present case the non-disclosure of the same in the service tax return cannot, absent anything more, lead to the conclusion that the assessee is guilty of sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression. (emphasis supplied) 46. This decision was referred to by the Supreme Court in Anand Nishikawa Company Ltd. and the observations are as follows: 26 .. This Court in the case of Pushpam Pharmaceutical Company v. Collector of Central Excise, Bombay, while dealing with the meaning of the expression suppression of facts in proviso to Section 11A of the Act held that the term must be construed strictly. It does not mean any omission and the act must be deliberate and willful to evade payment of duty. The Court, further, held:- In taxation, it ( suppression of facts ) can have only one meaning that the correct information was not disclosed deliberately to escape payment of duty. Where facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. (emphasis supplied) 50. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication) [ 2018 (12) GSTL 368 (Del.) ] also examined at length the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Finance Act and held as follows; 27. Therefore, it is evident that failure to pay tax is not a justification fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for rendering any taxable service. On the contrary, the statements of the officials of MTNL, relied upon by the respondents, clearly indicate that they were under the belief that the receipt of compensation/financial support from the Government of India was not taxable. Absent any intention to evade tax, which may be evident from any material on record or from the conduct of an assessee, the extended period of limitation under the proviso 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) 52. It has, therefore, been settled by the Supreme Court and the Delhi High Court that mere suppression of facts is not enough and there must be a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, indicate that even before the audit was conducted in the month of September 2010, the appellant had disclosed details of the credit availed of the tax/duty paid on inputs, input services and capital goods in the ST-3 return which was filed on 25.04.2010 for the period October 2009 to March 2010. After the audit was carried out in September 2010, the appellant had also filed the ST-3 return on 25.10.2010 for the period April 2010 to September 2010, in which details of the credit availed were disclosed. The ST-3 return for the period October 2010 to March 2011 in which details were disclosed was also filed by the appellant on 25.04.2011. In such a situation, it is not permissible for the department to take re-course to the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act, particularly when the notice under section 73(1) of the Finance Act could have been issued within one year from the relevant date even with respect to the last return filed in April 2011. The order passed by the Commissioner, therefore, incorrectly assumes that the appellant had consciously suppressed facts and it is for this reason only that the order also h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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