9911796707
TMI Blog2025 (1) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... m. The appellant claims that it discharged service tax liability on the advance receipts on account of construction services and on legal services under reverse charge mechanism. During the period 2013-14 to 2017-18, the appellant also gave corporate guarantees to various banks for credit facility sanctioned to associated enterprises. 3. A show cause notice dated 11.10.2019 was served upon the appellant demanding service tax of Rs. 2,40,96,546/- with the following breakup: Nature of service Differential amount of short payment Legal Services 16936 Corporate Gusrantee 5131512 Advances From Customers [Excluding Tax Already Paid On Commercial Construction & Work Contract] (20551178-1601597) 18948098 Total 24,096,546 4. The show cause also invoked the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act and the relevant portion of the show cause notice relating to this issue is reproduced below: "(ii) M/s Wellworth Project Developers Private Limited, 232-B, 4th Floor, Okhla Industrial Estate, Phase-III, New Delhi have suppressed the entire value of taxable services provide by them. They have not sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned SCN it has been mentioned that Noticee did not cooperate during the course of investigation. If a holistic consideration and analysis be taken of the facts and circumstances, then Ld. Adjudicating Authority will not find any justification for invocation of the extended period of limitation under the proviso to Section 73(1) of the Act. A.7 The Authorized persons of the Noticee vide their letter dated 22 January 2019 submitted the documents and details called for by the department. Had the Noticee, not given any documents as demanded by the officer in charge, on time, then it could have been interpreted that Noticee is trying to suppress any facts, which might have caused delay in investigation proceedings as well. A.8 Therefore, it is submitted that invocation of the extended period of limitation is unsustainable since the complete and relevant facts with regard to the transactions in issue were available with the Department and were within its knowledge and there is no question of willful suppression, fraud or intent to evade payment of service tax. xxxxxxxxxxxx A.10 xxxxxxxxxxx No concrete allegation has been made in the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perly within specified time/ manner. I find that, the evasion of Service Tax referred in the SCN would have not come to light and continued unabated if investigations were not carried out by the authorities. 32.5 In the instant case, the information regarding the element of short-payment of Service Tax has genesis only after the investigations of the records of the noticee by the Department and without which the short payment of Service Tax could not have been detected. I find that such acts of the noticee can be considered as acts performed with malafide intention to evade payment of Service Tax appropriately and timely. Hence, such acts are squarely covered under the elements of deliberate suppression of facts with intent to evade payment of Service Tax as stated under proviso to Section 73 (1) supra. 32.6 The suppression of facts clearly leads to the conclusion that the Noticee had intention to evade tax. This finds support from the ratio of the judgment and order delivered in the matter of Dugal Tetenal India Ltd. Vs. C.C.E reported in 2002 (147) E.L.T 578 (Tri.-Del.), wherein the Hon'ble Tribunal particularly mentioned that there was no evidence on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14.50% 0 2016-17 15.00% 0 2017-18 2,10,00,000 15.00% 31,50,000 Total 3,70,31,648 51,31,512 Grand Total 20,34,05,365 2,57,11,986 8. The differential amount of short payment is as follows: Nature of service Differential amount of short payment Legal Services 16,936 Corporate Guarantee 51,31,512 Advance from Customer [excluding tax already paid on Commercial Construction & Work Contract] (2,05,51,178 - 16,01,597) 1,89,48,098 Total 2,40,96,546 9. Shri Shaubhik Gupta, learned counsel for the appellant made the following submissions: (i) The service tax demand of Rs. 2,24,43,944 out of the total disputed demand of Rs. 2,40,96,546, as confirmed in the impugned order, pertains to the financial year 2013-14. This demand is timebarred as it exceeds even the extended period of five-year limitation period stipulated under section 73(1) of the Finance Act. The five years period expired on 25.10.2018 and on 25.04.2019 for the respective half yearly periods of the Financial Year 2013-14; (ii) Even the extended period of limitation contemplated under the proviso to sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id 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 "thirty months", the words "five years" had been substituted." 14. It needs to be noted that out of the total confirmed demand of Rs. 2,40,96,546/-, the demand of Rs. 2,24,43,944/- is with respect to the Financial Year 2013-14. For the respective half yearly periods for the Financial Year 2013-14, the period of five years would expire on 25.10.2018 and 25.04.2019. The show cause notice that was issued on 11.10.2019 was clearly beyond the period of five years. The following ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed facts, much less with an intent to evade payment of service. The appellant also pointed out that specific allegations had not been made in the show cause notice regarding any mala fide intention in suppressing facts. The Commissioner has observed in the order that a show cause notice can be issued within five years from the relevant date "if the escapement of assessment or under assessment of the service tax was due to omission or failure on the part of the assessee to disclose wholly and truly all material facts required for verification of the self-assessment under section 70 of the Act ibid". The Commissioner, further observed that the department places trust on an assessee under the selfassessment scheme and, therefore, filing improper returns and not disclosing the actual value of services provided, would amount to intentional suppression of facts. The Commissioner also noted that evasion of service tax would not have come to the knowledge of the department if investigation had not been carried out and, therefore, the appellant acted with mala fide intention to evade payment of service tax. The Commissioner ultimately concluded that suppression of facts clearly leads to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ragraph is as follows:- "27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceuticals Co. v. CCE 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 and not that he must have done, would not render it suppression. It is settled law that mere failure to declare does not amount to wilful suppression indicate. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made hereinabove 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 d in the proviso to Section 11-A of the Act. We are, therefore, of the firm opinion that where facts were known to both the parties, as in the instant case, it was 7 (2005) 7 SCC 749 11 E/52953/2018 not open to CEGAT to come to a conclusion that the appellant was guilty of "suppression of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds as "fraud‟ or "collusion" and, therefore, has to be construed 8strictly. 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 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with knowledge that the statement was not correct." (emphasis supplied) 29. It is, therefore, clear that the suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty. 30. In M/s. Raydean Industries vs. Commissioner CGST, Jaipur [Excise Appeal No. 52480 of 2019 decided on 19.12.2022] the Tribunal in connection with the extended period of limitation, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by CBEC on May 17, 2005, which is available on the website of CBEC, devotes Part VI to SCRUTINY OF ASSESSMENT. xxxxxxxxxx 27. It is thus evident that not only do the 2002 Rules mandate officers to scrutinise the Returns to verify the correctness of self assessment and empower the officers to call for documents and records for the purpose, Instructions issued by the department also specifically require officers at various levels to do so." (emphasis supplied) 31. 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 liability correctly and this determination is required to be made on the basis of his own judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough to invoke the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act. The suppression has to be with an intent to evade payment of service tax and for this purpose the show cause notice must specifically allege why the asseessee has suppressed facts with intent to evade payment of service tax. The Commissioner merely observed that show cause notice can be issued within five years from the relevant date if assessment was due to omission of failure on the part of an assessment to disclose wholly and truly all material facts required for verification of the self-assessment. The Commissioner completely misread the proviso to section 73(1) of the Finance Act. Though the normal period for issue of a show cause notice at the relevant time was thirty months, the extended period of limitation upto five years could have been invoked only if there was suppression of facts with a clear intention to evade payment of service tax. Mere suppression of facts would not result in invocation of the extended period of limitation. 33. Even under the self-assessment scheme, the Tribunal has repeatedly held that the proper officer can always seek info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee has argued that they have not received any consideration. In such case it's for the department to prove that the Assessee's claim is wrong. It is observed that nowhere in the Show Cause Notice, attempt has been made to prove that the Assessee received either monetary or non-monetary consideration in any form. It is not alleged or proved in the Show Cause Notice as to how the Assessee got any benefit from their subsidiaries in monetary or non-monetary terms for the Corporate Guarantees issued. Missing this vital point, valuation of the consideration using provisions of Section 67(1) of the Finance Act, 1994 become a futile exercise." 6. Mr. Rai Chandani then read paragraphs 8 and 9 of the judgment of the Tribunal, which are extracted below:- "8. The criticality of 'consideration' for determination of service, as defined in section 65B(44) of Finance Act, 1994, for the disputed period after introduction of 'negative list' regime of taxation has been rightly construed by the adjudicating authority. Any activity must, for the purpose of taxability under Finance Act, 1994, not only, in relation to another, reveal a 'provider', ..... X X X X Extracts X X X X X X X X Extracts X X X X
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