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TMI Blog2024 (8) TMI 1520X X X X Extracts X X X X X X X X Extracts X X X X ..... 19) & 65(105)(zzb) of the Finance Act. 1994. 2.2 During the course of audit of accounts of the appellant and subsequent inquiry, it was found that the appellants were paid commission by the Bank after certain deductions including DMA subvention/Reduce etc., Commission, Cancellation cases amount, etc. and that the appellants were paying Service Tax on Net amount of Commission and not on Gross Commission. The certificates issued by the ICICI Bank categorically reflected the Gross Commission payable, based on the loan amounts. As such, it was alleged that the appellants have not discharged service tax on the Gross Commission amount due to the appellants from ICICI Bank, as per provision of Section 67 of the Act and it resulted in short payment of service tax amounting to Rs.52,92,942/-/. 2.3 It was also alleged that the appellants have willfully & intentionally suppressed the Gross Commission, which resulted into short payment of service tax. They also not paid service tax during the half-year ending 31.03.2005 and also failed to file ST-3 Return for this period. Also a part of value of taxable service escaped assessment by reason of willful suppression of material facts and materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited Versus Commissioner of Central Excise, Chandigarh reported as 2012 (25) S.T.R. 68 (Tri.Del) Commissioner of Central Excise, Jaipur-l Versus Chambal Motors (P) Ltd. reported as 2008(9) S.T.R. 275 (Tri-Del.) M/s Pagariya Auto Center Versus Commissioner of C. Ex. Aurangabad reported as 2014 (33) S.T.R. 506 (Tri-LB) South City Motors Ltd. Versus Commissioner of Service Tax, Delhi reported as 2012(25) S.T.R. 483 (Tri. Del). 4.2 As regards the invocation of extended period of limitation is concerned, Ld. Counsel for the appellant submits that there does not exist any ground for invoking the extended period of limitation as the appellant has not suppressed anything from the Department with intend to evade payment of service tax. He further submits that the appellant had been paying the service tax on the amount received as commission from the banks and there was no malafied intention to evade. Ld. Counsel also submits that the impugned order has been passed in violation of principle of natural justice because the same has been passed without supplying the copies of the documents on the basis of which adverse finding has been given, in fact the appellant kept on requesting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank to the appellants cannot be termed as gross amount of consideration due to the appellants for provision of the services to the bank. He further submits that as per provision of the Service Tax (Determination of Value) Rules, 2006 where under inclusion in or exclusion from value of various components has been detailed and there is no clause, in the Valuation Rules 2006, for exclusion of such deductions. Further, as per Rule 5(1) of the Valuation Rules 2006 stipulates that "Where any expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable service provided or to be provided and shall be included in the value for the purpose of charging service tax on the said service. He further submits that the contention of the appellant in reference to section 194 H of the Income Tax Act does not help them in the instant case as the provisions of the income tax Act cannot be applied for computation of taxable value for the payment of service tax. He further submits that is identical facts and circumstances, the Hon'ble CESTAT, Mumbai in case of Commissioner of Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not avail of 'Business Auxiliary Services' as a client From the nature of agreements on record including the franchisee agreement in the third appeal, it is clear that the assessees were, under an agreement with the bank had undertaken to provide service in relation to promotion or marketing of the Banking and Financial Services provided by the banks. The banks were providing services under the category Banking and Other Financial Services' falling in Clause (12) of Section 65 in relation to those services, the respondent-assessees were providing services for promotion or marketing of the banking and other financial services provided by the banks. The banks were, therefore, their clients being recipient of such services from the respondents. It has come in evidence that the respondents ware required to obtain loan applications from their customers who desired to avail loans from the banks. The respondents had undertaken to process those applications and after scrutiny forward them to the bank. Admittedly for such services, they were paid commission by the bank, which was reflected in their account. Once consideration accrued to them, as against the services provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Supra) we hold that the appellant is liable to pay service tax on the gross commission rather than the net commission received by them, hence this issue is decided against the appellant. As regards invoking the extended period of limitation, the Department has to establish the ingredients as provided in Section 73 of the Finance act, namely; "(a) fraud; or (b) Collusion; or (c) willful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules thereunder with intent to evade payment of service tax" Whereas, in this case, the Department has been able to establish that the appellant has suppressed the material facts with intention to evade the payment of service tax because the appellant was under bonafide belief that they are liable to pay service tax on the net amount of commission received from the bank and they have been paying the service tax accordingly and have been filing service tax returns. Further we find that the Division Bench of the Delhi Tribunal in the case of Shyam Spectra Private Limited has examined the issue of limitation in detail and after considering the various decisions of the High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticulars 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 has to be "wilful‟ since "wilful‟ precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression "wilful" before "suppression of fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 not that he must have done, does not render it suppression." 27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudication) 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 mere omission or mere failure to pay duty or take out a license without the presence of such intention." xxxxxxxx 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 liability correctly and this determination is required to be made on the basis of his own judgment and in a bonafide manner. The relevant portion of the judgment is reproduced below: "23. We are in full agreement with the finding of the Tribunal that during the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 in the return filed by the assessee under sub-rule (1), and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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