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TMI Blog2024 (1) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... ty [CVD] paid by the appellant on the goods imported by it, which are used or to be used for activities under the Concession Contract awarded to it by Delhi Metro Rail Corporation [the Delhi Metro], which is a joint venture company of the Government of India and the Government of National Capital Territory of Delhi. Another issue that would arise for consideration, if the answer to the first issue is in favour of the appellant, is whether the appellant would be entitled to refund of Rs. 65,01,43,929/- under section 142(8) of the Central Goods and Service Tax Act, 1917 [the CGST Act]. 3. The Delhi Metro implemented the "Airport Metro Express Line" Project [the Project] in New Delhi. It developed the Project by engaging a concessionaire for financing, design, procurement and installation of all systems. The bid of the consortium comprising M/s Reliance Energy Limited (now known as M/s Reliance Infrastructure Limited) and Construcciones Y Auxiliar De Ferrocarriles (CAF) S.A. with M/s Reliance Infrastructure Limited as its lead member was accepted by the Delhi Metro and a letter of acceptance dated 21.01.2008 was issued. Reliance Infrastructure Limited promoted a "Special Purpose Vehi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant had also imported goods, such as rolling stock, automatic fare collection equipment, baggage handling system, escalators, fasteners from outside India on payment of customs duty, including CVD. The appellant took the credit of the service tax and CVD paid on the said services and the imported goods in its books of account and included the details in the periodical service tax returns. 8. In the month of September 2010, an audit of the records of the appellant was conducted by the Department and the audit group observed that the availment and accumulation of CENVAT credit of service tax paid by the appellant on consulting engineer service and banking and other financial services under the reverse charge mechanism and of the CVD paid by it on the import of goods was erroneous. 9. The total CENVAT credit availed by the appellant in the books of account as on 31.03.2011 is Rs. 94,02,07,834/-. However, according to the appellant, in view of the provisions of the Credit Rules, it availed CENVAT credit of only Rs. 65,01,43,929/-. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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/- 1,92,00,475/- 6,42,40,058/- 2,61,06,370/- 65,01,43,929/- As per revised claim of assessee 29,95,92,447/-* 26,02,05,054/- 6,42,40,058/- 2,62,45,420/- 65,02,82,979/- *This amount includes Rs. 1,39,050/- which was debited on audit. 12. Paragraph 16.4 of the show cause notice gives reasons as to why the CENVAT credit amounting to Rs. 26,02,05,054/-, as given in Table III, taken on capital goods would not be admissible to the assessee and it is reproduced below: "16.4 Whereas it appears that the goods on which CENVAT Credit has been availed as Capital Goods were used exclusively in rendering construction and operation of Airport Metro Express Line. These equipments appears to have been installed at Metro stations to faci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erse 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 cause notice gives reasons why the extended period of limitation has been invoked and it is reproduced below: "20. From the foregoing, it further appears that the assessee had intentionally and willfully suppressed the facts of availing the said inadmissible CENVAT Credit. Hence, it appears that the said amount is liable to be denied and recovered within five years from the relevant date under proviso to Section 73 (1) of the Act ibid read with Rule 14 of the CENVAT Credit Rules, 2004." 16. The appellant filed a detailed reply dated 21.08.2012 to the show cause notice. The appellant also pointed out in the written submissions that the extended period of limitation could not have been invoked as the show cause notice could have been issued within one year from the relevant date and the said period of one year could only be extended by five years in terms of the proviso to section 73(1) of the Finance Act, but the conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount 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 order demonstrating any positive evidence of intent to evade payment of service tax. On the contrary, the suo motu reversal by the appellant proves the bonafide of the appellant. In this connection, reliance has been placed on the decisions of the Supreme Court in Pahwa Chemicals Pvt. Ltd. vs. CCE, Delhi [2005 (189) ELT 257 (SC)] and Anand Nishikawa Co. Ltd. vs CCE (Appeals), Meerut [2005 (188) ELT 149 (SC)] ; (iv) In any view of the matter, the appellant had claimed CENVAT credit under a bonafide belief that it is legally entitled to claim the same and, therefore, there cannot be any suppression or mis-statement or malafide intention; (v) The appellant had not provided construction/ works contract service to Delhi Metro. Accordingly, the activities undertaken by the appellant in fulfilling its obligation under the Concession Agreement were towards transfer of a right to collect revenue as a part of the overall business model, and cannot in any manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances 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 would be appropriate to reproduce section 73 of the Finance Act, as it stood at the relevant time. This section deals with recovery of service tax not levied or paid or short levied or short paid or erroneously refunded. It is as follows; "73(1) Where 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment. 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 read with Rule 14 of the CENVAT Credit Rules, 2004 for demand and recovery of the inadmissible CENVAT Credit, and the assessee has also rendered themselves liable for penal action under Section 78 of the Act read with Rule 15 of CCR for deliberately suppressing the material facts." (emphasis supplied) 26. The contention of the learned counsel for the appellant is that the necessary ingredients for invoking the larger period of limitation contemplated under the proviso to section 73 (1) of the Finance Act, namely wilful suppression of facts with an intent to evade payment of service tax did not exist and, therefore, the extended period of limitation could not have been invoked. Learned counsel for the appellant pointed out that during the course of the audit all the relevant facts were considered by the audit team and the objection regarding the purported erroneous availment of CENVAT credit was communicated to the appellant by a letter dated 30.11.2010. Thus, once the department was aware of the entire facts, nothin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CENVAT credit to which it was not entitled and, therefore, the appellant suppressed facts with intent to evade payment of service tax. Learned authorised representative also pointed out that these facts came to the knowledge of the department during the audit. 28. 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 the amount specified in the notice. 29. 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, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed; (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the return filed for the period April 2010 to September 2010. The appellant has also explained why the two returns were revised and the reasons are as follows: (i) October 2009 to March 2010 - Addition of credit of Rs. 21,74,81,033/- pertaining to inputs used in providing of services by the appellant were inadvertently not claimed earlier; (ii) October 2010 to March 2011 - Addition of credit of Rs. 2,46,55,102/- pertaining to capital goods (Rs. 1,92,00,475) and input services (Rs. 54,54,627) used in providing of services by the appellant were inadvertently not claimed earlier. 36. It is, therefore, clear that only some credits not claimed earlier by mistake were inclued in the revised ST-3 returns. Thus, if the department wanted to issue notice under section 73(1) of the Finance Act, it could have issued the notice when the ST-3 returns were filed since all the relevant facts were in the knowledge of the department and no new fact for issuance of the notice was disclosed in the revised ST-3 returns. It cannot, therefore, be contended by the department that the period of limitation should be counted from the date of filing of the revised ST returns. 37. Keeping in mind the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, it is also not possible to provide any details which are not part of the returns. If the format of ST-3 Returns is deficient in design and does not seek the details which the assessing officers may require to scrutinise them, the appellant cannot be faulted because as an assessee, the appellant neither makes the Rules nor designs the format of the Returns. So long as the assessee files the returns in the formats honestly as per its self assessment, its obligation is discharged." (emphasis supplied) 40. It is, therefore, clear from the aforesaid discussion that the appellant had not suppressed any information from the department in the ST-3, returns nor is there any allegation in the show 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. 41. It is also the contention of the appellant that it had claimed CENVAT credit under a bona-fide belief that it was entitled to claim the same. The department believes that the appellant was not entitled to claim the CENVAT credit. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Nigam and the decision of the Tribunal in G.D. Goenka it cannot be urged that the appellant had suppressed facts from the department. 44. Even assuming that there was suppression, it still needs to be examined whether suppression was wilful and with an intent to evade payment of service tax as the Supreme Court and the Delhi High Court have held that suppression of facts has to be "wilful‟ and there should also be an intent to evade payment of service tax. 45. In Pushpam Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay [1995 (78) E.L.T. 401 (SC)], 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this Court in the case of Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bombay [1995 Suppl. (3) SCC 462], 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 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) 47. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra), "misstatement or suppression of facts" does not mean any omission. It must be deliberate. In other words, there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a positive act of the assessee to avoid excise duty. xxxxxxx Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention." xxxxxxx The Revenue has not been able to prove an intention on the part of the Appellant to avoid tax by suppression of mention facts. In fact it is clear that the Appellant did not have any such intention and was acting under a bonafide belief." (emphasis supplied) 51. Very recently the Delhi High Court in Mahanagar Telephone Nigam Ltd., also observed as follows: "28. In terms of the proviso to Section 73(1) of the Act, the extended period of limitation is applicable only in cases where service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, or collusion, or wilful misstatement, or suppre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation cannot be invoked. 53. Paragraph 20 of the show cause notice merely alleges that the appellant had consciously suppressed the fact of availing inadmissible CENVAT credit with intent to evade payment of duty. The show cause notice does not elaborate or specify the intention. The impugned order passed by the Commissioner also, after noticing that where there is an obligation to speak, a failure to speak will constitute suppression of facts, holds: "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." (emphasis supplied) 54. The show cause notice was issued on 20.07.2012. It is, therefore, important to ascertain at what point of time the department became aware that the appellant had availed CENVA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 57. The impugned order dated 12.12.2014 passed by the Commissioner disallowing CENVAT credit taken by the appellant and ordering for its reversal with penalty and interest cannot, therefore, be sustained as the entire amount covered by the show cause notice and the order is under the extended period of limitation. 58. In such circumstances it will not be necessary to examine whether the appellant had correctly availed CENVAT credit. 59. The appellant has also claimed refund of the amount under section 142(8) of the CGST Act as a consequence of the setting aside of the order passed by the Commissioner. It is for the appellant to claim refund in appropriate proceedings, as it may be advised. 60. The impugned order dated 12.12.2014 passed by the Commissioner is, therefore, set aside and the appeal is allowed. It is, however, expected that if an application for refund is filed by the appellant, it shall be decided expeditiously and in accordance with law as the show cause notice was issued on 20.07.2012 and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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