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TMI Blog2024 (8) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... 25.07.2011 and 26.08.2011 for the period from 2006-07 to 2009-10. 3. On the basis of the audit report, a show cause dated 19.10.2011 was issued to the appellant proposing demand of service tax with interest and penalty on the following issues: I. Services rendered to STPI units (a) The appellant rendered services to STPI Units (100% EOU) during the relevant period, which are not exempted from service tax under Notification dated 31.03.2004. (b) The services rendered by the appellant were in nature of lease circuit services, telecommunication services, internet telecommunication services, online information services, on which the appellant is liable to pay service tax. (c) For the period from 2008-09 to 2010-11, the appellant is liable to pay service tax of Rs. 1,03,66,861/-. II. Services rendered to US Library of Congress and US Commercial Services (a) The appellant rendered certain services to US Library of Congress and US Commercial Services, which are not exempt under Notification dated 02.08.2002. (b) For the period from 2008-09 to 2010-11, the appellant is liable to pay service tax of Rs. 2,25,573/-. III. Service Tax on the above services during 2006-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le in terms of Section 66 of the Act and failed to remit the service tax so leviable within the stipulated time of the service rendered as required under Section 68 of the said Act;. d) Section 75 of the Finance Act, 1994 as amended in as much as they failed to deposit Service Tax and failed to deposit applicable interest on the same; e) Rule 6(2) of CENVAT Credit Rules, 2004 in as much as they failed to maintain separate accounts for taxable and non-taxable/exempted services as they were providing both taxable and non-taxable/exempted services; f) Rule 6(3) (c) of CENVAT Credit Rules, 2004 in as much as they failed to utilize CENVAT Credit only to extent of an amount not exceeding twenty percent of the amount of service tax payable on taxable output service; g) Section 91 read with Section 95 of the Finance Act (No2),2004 & Section 136 read with Section 140 of the Finance Act, 2007 in as much as they have failed to deposit into the account of the Government of India, the Education Cess and SHEC leviable from them and failed to remit the service tax so leviable within the stipulated time of the service rendered as required under Section 68 of the said Act; 12. Wherea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the department till date." (emphasis supplied) 8. Shri J. K. Mittal, learned counsel for the appellant assisted by Shri Kapil Kant submitted that not only should the impugned order be set aside for failure to comply with the time limited specified in section 73 (4B) of the Finance Act, but also for the reason that the extended period of limitation could not have been invoked in the facts and circumstances. Learned counsel also submitted that when the extended period of limitation cannot be invoked, then the demand for the period within limitation cannot also be confirmed in view of the judgment of the Calcutta High Court in Infinity Infotech Parks Ltd vs. Union of India [2014 (36) S.T.R. 37 (Cal.) decided on 30.04.2014]. 9. Shri Rajeev Kapoor, learned authorized representative appearing for the department, however, supported the impugned order and submitted that it does not call for any interference in this appeal. 10. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 11. It would be appropriate to first examine whether the extended period of limitation could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder; 16. The proviso to section 73(1) of the Finance Act stipulates that where any service tax has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Chapter or the Rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax, the provisions of the said section shall have effect as if, for the word "one year", the word "five years" has been substituted. 17. It is correct that section 73 (1) of the Finance Act does not mention that suppression of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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) 19. This decision was referred to by the Supreme Court in Anand Nishikawa Company Ltd. vs. Commissioner of Central Excise [2005 (188) E.L.T. 149 (SC)] 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 are known to both the parties the omission by one to do what he might have done and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct." (emphasis supplied) 22. 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 for imposition of penalty. Also, the word "suppression‟ in the proviso to Section 11A(1) of the Excise Act has to be read in the context of other words in the proviso, i.e. "fraud, collusion, wilful misstatement". As explained in Uniworth (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. xxxxxxxx Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant, it was under a bonafide belief that it was not liable to pay service tax and the matter also involved interpretation of various provisions of the Finance Act as well as the services rendered to the SEZ Units and to the STPI Units. The appellant had been filing the service tax returns and an audit of the records of the appellant had also been conducted in 2010 for the period 2006-07 to 2009-10. The show cause notice was, however, issued on 19.10.2011 after a substantial lapse of time. 27. In this connection, it would be pertinent to refer to the judgment of the Supreme Court in Commissioner of C. Ex. & Customs vs. Reliance Industries Ltd. [2023 (385) E.L.T. 481 (S.C.)]. The Supreme Court held that if an assessee bonafide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be malafide. If a dispute relates to interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it the responsibility of the assessee to determine the liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided on 19.12.2022], the Tribunal in connection with the extended period of limitation, observed that even in the case of self assessment, the department can always call upon an assessee and seek information and it is the duty of the proper officer to scrutinize the correctness of the duty assessed by the assessee. The Division Bench also noted that departmental instructions issued to officers also emphasise that it is the duty of the officers to scrutinize the returns. The relevant portion of the decision is reproduced below: "24. It would be seen that the ER-III/ER-I returns filed by the applicant clearly show that the applicant had categorically declared that it had cleared the final products by availing the exemption under the notification dated 17.03.2012. The applicant had furnished the returns on the basis of self assessment. Even in a case of self assessment, the Department can always call upon an assessee and seek information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 20028 that the assessee is expected to self assess the duty and sub-rule (3) of rule 12 of the 2002 Rules provides that the proper officer may, on the basis of information contained ..... X X X X Extracts X X X X X X X X Extracts X X X X
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