Custom, Excise & Service Tax Tribunal
Director General State Transport vs Chandigarh-I on 22 July, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. I
Service Tax Appeal No. 57012 of 2013
[Arising out of Order-in-Appeal No. 32/ST/Appl/CHD-1/2023 dated 25.02.2013
passed by the Commissioner (Appeals), Central Excise & Service Tax, Chandigarh]
Director General State Transport ......Appellant
State Government of Haryana, 30 Bays
Building, Sector-17, Chandigarh-160017
VERSUS
Commissioner of Central Excise, ......Respondent
Chandigarh-I Central Revenue Building, Plot No.19, Sector-17C, Chandigarh-160017 APPEARANCE:
Shri B.K. Nohria and Shri N.K. Nohria, Chartered Accountants for the Appellant Shri Yashpal Singh, Authorized Representative for the Respondent CORAM: HON'BLE MR. S. S. GARG, MEMBER (JUDICIAL) HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) FINAL ORDER NO. 60878/2025 DATE OF HEARING: 03.07.2025 DATE OF DECISION: 22.07.2025 P. ANJANI KUMAR:
Director General State Transport, Government of Haryana, entered in to an agreement with M/s. Pisces Communication (P) Ltd for providing space for advertisement on Haryana roadways busses during the period 01.08.2006 to 31.08.2008; It appeared to the
2 ST/57012/2013 Revenue that the appellant has provided taxable services of "Sale of space for advertisement", as per Section 65(105) (zzzm), during the period 01.08.2006 to 31.07.2008; the appellant had not obtained Service Tax registration and did not pay Service tax of Rs 31,08,455; appellant was requested by a letter dated 09.03.2007 to provide the details of amounts received by them in this regard from organizations/Advertising agencies; after repeated reminders the appellant replied vide their letter dated 02.07.2008 that the due service tax on Space Selling services has been deposited by their client namely M/s Pisces Communication Ltd and that they were in the process of getting registered with the Service Tax Department; the appellant was informed vide letter dated 25.07.2008 to get registered and pay service tax; various summonses dated 18.03.09, 09.04.09, 28.04.09, 28.05.09 to were issued; representative from the Office of Transport Commissioner, Haryana, finally appeared and his statement dated 05.06.2009 was recorded and stated that during the period in dispute, they had provided space for display of advertisements on their buses to M/s Pisces Communications Pvt Ltd Delhi, for an amount of Rs 2,52,72,000/- and as per the agreement, their client deposited the service tax on the same; documents in relation to deposit of service tax has already been submitted to the department; revenue was of the opinion that the challans under which, M/s Pisces Communications deposited Tax indicated the Head' Advertising Services'; thus, it appeared that Service Tax payable by M/s Pisces Communications for the ' Advertising Services', which they rendered were paid but the Service tax 3 ST/57012/2013 payable by the appellants for the service of "Sale of space for advertisement" remained to be paid; Accordingly, the a show cause notice on 18.11.2009, invoking the extended period, demanding service tax of Rs. 31,08,455, along with interest and penalties, for the period 01.08.2006 to 31.07.2008, was issued to the appellant. Additional Commissioner adjudicated the Show Cause Notice, vide order dated 19.10.2010, and confirmed the liability along with interest while imposing penalties under Sections 76,77,78 of Finance Act,1994. Being aggrieved, the appellant filed an appeal with Commissioner (Appeals), who vide impugned order dated 25- 02-2013, rejected the appeal but dropped penalty under Section 76. Hence, This Appeal No. 57012/2013.
2. Shri B.K. Nohria, assisted by Shri N.K. Nohria, Learned Consultants for the appellants reiterates the grounds of appeal and submits on the issue of limitation that the appellant owns Haryana Roadways and is operating buses for the convenience of public within and outside the state of Haryana; the appellant had space available for the display of advertisements on 3,000 buses owned by them. He submits that the impugned order is illegal as it is barred by limitation; extended period of limitation cannot be invoked as it is illegal, bad in law, arbitrary, unjustified and against the rules prescribed under the Service Tax act; the Appellant was under the bona fide belief that they are not required to collect and pay service tax in view of the specific agreement executed between the parties; Appellant is the Government Department/Undertaking wherein no personal interest can be imputed leading to concealment of facts or 4 ST/57012/2013 withholding of tax due to another government department; no wilful suppression has been made by the Appellant on any account. 2.1. Learned Consultant submits that the appellant had a bona-fide belief that the service tax, if leviable, on the above stated receipt of amount is the responsibility of the contractor i.e. M/s Pisces Communications Private Limited, as per Para 3(c) of the agreement dated 19.07.2006 which states that "The taxes & levies, if any, payable on the advertisements to the State Govt., Govt of India, other Govts. or Administration or Authorities shall be paid by the contractor and not by the Transport Department; the contractor shall be liable to make their own arrangements for payment of such taxes/levies; the contractor will be fully responsible for the consequences for non-payment of any such taxes/levies."; the Appellant had enclosed copies of TR-6 Challans, vide letter No. 1423/AI/ACC dated 21.04.2009, and informed that the service tax on the alleged services has been paid by M/s Pisces Communications Private Limited; in view of the agreement/ contract, dated 19.07.2006, the appellant was of bona-fide belief that they were not required to obtain registration as the Appellant believed that the service tax was duly paid by M/s Pisces Communications Private Limited; merely because the registration was not obtained, it cannot be held that the appellant has an intent to evade payment of taxes.
2.2. Learned Consultant submits also that the appellant had no intention to evade taxes; soon after the receipt of letter from Service Department, they decided to apply for service tax 5 ST/57012/2013 registration and had engaged M/s Vigyan Arora & Co., Chartered Accountants for the purpose; the appellant being Government was not required to take PAN under section 139A of the Income Tax Act, 1961; as they did not have PAN number, it had to apply on the basis of TAN (Tax deduction and collection account number) issued under Section 203A of the Income Tax Act, 1961; a reminder dated 31.12.2007 was issued to M/s Vigyan Arora & Co along with Copy to Central Excise; M/s Vigyan Arora & Co., Chartered Accountants, vide letter dated 15.01.2008 requested the appellants for documents; as proof of issue of 'TAN was not immediately available with the appellant, Commissioner of Income Tax, Chandigarh was requested vide letter No.6398/SA-III dated 03.12.2007, to provide a duplicate copy of TAN no. PTLT10062D; therefore, it can be seen that service tax registration could not be obtained for want of documents. 2.3. Learned Consultant submits that the Appellant was informed by the Service Tax Department about their liability to pay service tax on 25.07.2008, at the fag end of the period of dispute and after the receipt of last amount on 05.06.2008; the appellant had requested M/s Pisces Communications Private Limited, vide letter 07.02.2008, to deposit services on the alleged services provided by the appellant; a copy of the said letter was sent to Commissioner of Central Excise; Order in Original dated 19.10.2010 merely reiterates the contents of the show cause notice on the applicability of extended period and the impugned order is silent on the same. He submits that it has been held in a number of cases that intent to evade payment of service tax cannot be alleged against State 6 ST/57012/2013 Government Undertakings, Government Corporations, Companies etc. Learned Counsel submits that in view of the above, extended period cannot be invoked and consequently, penalty under section 78 of the Finance Act cannot be imposed. He relies on the decision of the Tribunal in the following cases.
M/s Himachal Pradesh Road Transport Corporation - Service Tax Appeal No. 56993 of 2013-CESTAT Chandigarh.
M/s Punjab State Grains Procurement Corporation Limited- Service Tax Appeal No. 59406 of 2013-CESTAT Chandigarh M/s GD Goenka Private Limited-Service Tax Appeal No. 51787 of 2022- CESTAT Delhi.
3. Learned Counsel submits as far as the merits are concerned that as per Section 65(105) (zzzm), "Taxable Service" means any service provided or to be provided to any person, by any other person, in relation to sale of space or time for advertisement, in any manner; but does not include sale of space for advertisement in print media and sale of time slots by a broadcasting agency or organisation. Counsel submits that the term 'person' become very important; question that arises is whether Government of Haryana i.e. Director General State Transport is a 'person' or not before the onset of negative list regime with effect from 01.07.2012; the term 'Person' was not defined in the Finance Act, 1994 until 01.07.2012; therefore, recourse need to be taken to the definition of 'Person' in General Clauses Act, 1897, for the period up to 30.06.2012; Section 3(42) of the General Clauses Act, 1897 defines "person" to include any company or association or body of individuals, whether 7 ST/57012/2013 incorporated or not;; therefore, 'Person' does not include State/Union Government which is separately defined therein Section 3(23) of the General Clauses Act, 1897 to include both the Central Government and any State Government. He submits that Director General State Transport being a part of the Government of Haryana is not covered within the term "Person" and, therefore, they are not covered by the definition of taxable service and no service tax can be charged from them for providing "sale of space for advertisement services".
3.1. Learned Consultant submits further that an identical matter was decided by Hon'ble CESTAT, New Delhi Bench in the case of Deputy Commissioner of Police, Jodhpur (2017 (48) STR 275 (Tri. -Del.) and Revenue's appeal against this order was dismissed by the Hon'ble Supreme Court in Civil Appeal Diary No. 24355 of 2017 (2018 (11) GSTL 1133 (SC)); CESTAT, New Delhi Bench held similarly in the case of Superintendent of Police - Appeal No. 50465 of 2017 and in the case of the Commandant -ST Appeal No. 52122 of 2016; Hon'ble Punjab & Haryana High Court in the case of Shiv Prashad vs. State of Punjab- 1956 (9) TMI 57 (P&H) held that State is capable of suing and being sued but that is so not because the State is a person, but because Article 300 of the Constitution has made an express Provision in this regard and thus neither a State nor a Government can fall within the ambit of the expression 'person' appearing in Article 14 of the Constitution; this equally applies to provisions relating to service tax under the Finance Act, 1994 as it stood during the relevant period.
8 ST/57012/2013 3.2. Learned Consultant submits further that nevertheless, the legislature is competent in its wisdom to define "person" separately for the purposes of each of the enactments and different from the one as defined in the General Clauses Act, 1897 and create an artificial unit; the definition of person in the General Clauses Act, 1897 would not operate as any fetter or restriction upon the powers of the State Legislature to define person and adopt a meaning different from as defined in the General Clauses Act, 1897 as held by the Hon'ble Apex Court in the case of Appeal (civil) 1994 of 2002 of Karnataka Bank Ltd vs State of A.P. & Ors of 21 January, 2008; therefore, it becomes clear that that prior to June, 2012, the definition of person as in the General Clauses Act, 1897 was applicable to the Finance Act, 1994; since there are different definitions for 'Government' and 'Person' in section 3(23) and Section 3(42) respectively under the General Clauses Act, 1897, the term "Person" does not include State/Union Government; consequently, service tax was not leviable on the State and Government Undertakings until Union/State was included in the definition of "Person" by insertion of Section 65(B)(37) w.e.f. 01.07.2012 in the Finance Act, 1994.
3.3. Learned Consultant submits in addition that provisions relating to service tax law were amended with effect from 01.07.2012 providing the definition of 'person' to include 'Government'; however, no tax was payable by the Government in respect of various services because either certain services fall under negative list, or certain services were exempt by a notification or on certain 9 ST/57012/2013 services, tax was payable by the recipient of service under reverse charge mechanism; per force, there was no service tax on services provided by the Government prior to 01.07.2012.
4. Learned Consultant further submits that the receiver of services has already deposited the full amount of service tax due on the value of the taxable service in compliance with the agreement executed between the service provider and the service receiver; there has been absolutely no leakage or loss of revenue to the department; the service tax demand raised against the appellant would result in double Taxation of the services thereby creating unnecessary complexity which would lead to multiple litigation on account of collection and deposition of service tax on one hand and claiming of refund on the other.
5. Shri Yashpal Singh, Learned Authorized Representative for the Revenue submits that extended period is rightly invoked on the ground that the appellant was provider of taxable service and was not registered with the department; the fact of evasion came to the knowledge of the department only during the investigation initiated against the appellant. Learned Authorized Representative submits on the claim of bona fide belief that the appellant was very well aware of the taxability of the service as is evident from their statement that they had incorporated the provisions of service tax in their agreement; being aware of the taxability and statute they cannot simply Passover their responsibility of payment of tax to their service recipient; Section 68 of the Finance Act stipulates that Every 10 ST/57012/2013 person providing taxable service to any person shall pay service tax at the rate specified in section 66 in such manner and within such period as may be prescribed. He relies on the decision of Hon'ble Bombay High Court in the case of Responsive Industries Ltd 2019 (26) GSTL 457 (Bom.) and submits that a mere statement to the effect that the Appellant was under a bona fide belief of non-liability of paying tax cannot be accepted in the face of clear provision of law.
5.1. Learned Authorized Representative submits on the appellants' contention that the receiver of services has already deposited the full amount of service tax is of no consequence; the Show Cause notice and the impugned order categorically hold that the Noticee have not provided any documentary evidence that could prove that the service tax deposited by M/s Pisces Communication Pvt Ltd Delhi, was in respect of the liability of the notices the challans produced were found to be the service tax paid liability of M/s. Pisces Communication pvt Ltd on "advertisement services" and not on the service of sale of space for advertisement services provided by the appellants.
5.2. Learned Authorized Representative submits that the plea of double taxation is not justified; it is without any ground; the indirect tax is so formulated that if one person deposits the tax another may avail the Cenvat credit on the same as per law, however, this cannot be made a plea that the payment of tax would amount to double taxation.
11 ST/57012/2013 5.3. Learned Authorized Representative submits that the claim of the appellants, that the appellants are Government undertaking wherein no personal interest can arise leading to concealment of facts or withholding of tax due to another government department, cannot be accepted as the government while formulating and executing statute did not make any distinction regarding non- payment of service tax by a Government Undertaking; if so, it would have been specifically mentioned in the law that a Government department is exempted from the taxability. He relies on the Air India Limited 2018 (8) GSTL 386 (Tri. - Del.); Bharat Petroleum Corporation 2009 (242) ELT 358 (Tri-Mumbai). He further submits that as appellant had not taken registration and had not filed ST-3 returns within the prescribed time, penalties imposed are justified. He relies on the following:
Om Sai Fabricators (2023) 5 Centax 210 (SC) Rajasthan Spinning Mills 2009 (238) ELT 3 (SC). Karnataka Bank Ltd vs State Of A.P. & Ors judgement dated 21 January, 2008 reported as 2008 AIR SCW Namtech Systems Ltd. Versus Commissioner of Central Excise, New Delhi reported as 2000 (115) E.L.T. 238 (Tribunal)- Larger Bench Tata Consultancy Services Vs. State of Andhra Pradesh reported as 2004 (178)ELT 22 (SC) Doypack Systems (Pvt) Ltd reported as 1988(36) ELT 201 (SC) Circular No. 89/7/2006-ST dated 18.12.2006 Circular No. 96/07/2007-ST dated 23.08.200 Manonmaniam Sundaranar University Versus Joint Director (GST Intelligence), Coimbatore Zonal Unit reported as 2022 (58) G.S.T.L. 27 (Mad.) 12 ST/57012/2013 M.P. State Seed Certification Agency Versus Commissioner of C. EX., Bhopal reported as 2017 (4) G.S.T.L. 206 (Tri. - Del.) Security Guards Board Vs. Commissioner of Central Excise, Thane-II reported as 2011 (24) S.T.R. 391 (Bom.) C. EX., Nashik Versus Maharashtra Industrial Devl.
Corpn-2018(9)GSTL.372 (BOM) Krishi Upaj Mandi Samiti Versus Commissioner of C. Ex. & S.T., Alwar reported as 2022 (58) G.S.T.L. 129 (S.C.)
6. Heard both sides and perused the records of the case. Submissions of the appellants in defense of their stand are that the impugned proceedings are barred by limitation and on merits, they cannot be treated as "a person" for the purpose of levy of service tax under Section 65(5) (zzzm) being a Government Department. Coming to the merits of the case, we find that the issue involved in the present case is no longer res integra; the case against the Delhi Transport Corporation - 2015 (38) STR 673 (Del.) having identical set of facts, involving "Sale of space for advertisement" by M/s Delhi Transport Corporation to the same contractor i.e. Pisces Communication Ltd. have decided the issue in favour of Revenue. Hon'ble High Court held as follows:
15. Service tax was introduced, for the first time, by Chapter V of the Finance Act, 1994 and has continued to be enforced in terms of such legislation, though amended several times. By virtue of Section 68, read with Rule 6(1) of the Service Tax Rules, 1994 framed thereunder, every person providing "taxable service" to any person is liable to pay service tax, at the rates specified in Section 66, to the credit of the 13 ST/57012/2013 Central Government. In terms of Section 67 (as amended with effect from 1-5-2006 by Finance Act, 2006) in a case where the provision of service is "for a consideration in money" it is the gross amount charged by the service provider for such service which is the value of the service for purposes of calculating the levy of service tax.
Section 69 of the Finance Act, 1994 stipulated that every person liable to pay service tax must mandatorily make an application to get itself registered for purposes of service tax within the period prescribed in the rules. Rule 6 of the Service Tax Rules, 1994 prescribe that a person liable to pay service tax is required to deposit the service tax chargeable on the services provided in the bank designated by the Central Board of Excise and Customs in the prescribed format and also submit returns in such regard on quarterly basis. Section 95 of the Finance Act, 2004 added the liability of the service provider to pay Education Cess on the tax levied and calculated under Section 91 read with Section 66.
16. By Finance Act, 2006, Section 65 (105) was amended to add the following to the categories of "taxable service" : -
"(zzzm) to any person, by any other person, in relation to sale of space or time for advertisement, in any manner; but does not include sale of space for advertisement in print media and sale of time slots by a broadcasting agency or organization."
17. There is no dispute that services provided are taxable within the meaning of Section 65 (105) (zzzn) and that the appellant is liable to pay service tax thereupon. We, however, do not agree with the views of CESTAT that the service tax liability could not have been transferred by way of a contract. The reliance of DTC on the 14 ST/57012/2013 ruling in Rashtriya Ispat Nigam Limited (supra) on this score was correct and it appears that the same has not been properly appreciated by CESTAT. Noticeably, the claim of the assessee in that case was also founded on contractual terms similar to the one relied upon by the appellant here.
18. The service tax liability in Rashtriya Ispat Nigam Limited (supra) arose out of contract given out for transportation of goods. The contractor engaged had undertaken to "bear and pay all taxes, duties and other liabilities in connection with discharge of his obligation". The contractor had invoked the arbitration clause for raising a dispute as to its liability to pay service tax. The claim petition was dismissed by the arbitrator which award was challenged by a petition under Section 34 of Arbitration and Conciliation Act before a Single Judge of Bombay High Court. The Learned Judge held that insofar as the service liability is concerned, the appellant (Rashtriya Ispat Nigam Limited) which had given the contract was the assessee and liable to tax. The appeal preferred against the said order on the petition was dismissed by the Division Bench of the High Court.
19. Against the backdrop of the above-noted facts in civil appeal carried to Supreme Court, it was observed as under : -
"37. As far as the submission of shifting of tax liability is concerned, as observed in para 9 of Laghu Udyog Bharati v. Union of India, (1999) 6 SCC 418, service tax is an indirect tax, and it is possible that it may be passed on. Therefore, an assessee can certainly enter into a contract to shift its liability of service tax.
15 ST/57012/2013
38. Though the appellant became the assessee due to amendment of 2000, his position is exactly the same as in respect of Sales Tax, where the seller is the assessee, and is liable to pay Sales Tax to the tax authorities, but it is open to the seller, under his contract with the buyer, to recover the Sales Tax from the buyer, and to pass on the tax burden to him. Therefore, though there is no difficulty in accepting that after the amendment of 2000 the liability to pay the service tax is on the appellant as the assessee, the liability arose out of the services rendered by the respondent to the appellant, and that too prior to this amendment when the liability was on the service provider.
39. The provisions concerning service tax are relevant only as between the appellant as an assessee under the statute and the tax authorities. This statutory provision can be of no relevance to determine the rights and liabilities between the appellant and the respondent as agreed in the contract between two of them. There was nothing in law to prevent the appellant from entering into an agreement with the respondent handling contractor that the burden of any tax arising out of obligations of the respondent under the contract would be borne by the respondent."
20. The above ruling of Supreme Court in the case of Rashtriya Ispat Nigam Limited (supra), however, cannot detract from the fact that in terms of the statutory provisions it is the 16 ST/57012/2013 appellant which is to discharge the liability towards the Revenue on account of service tax. Undoubtedly, the service tax burden can be transferred by contractual arrangement to the other party. But, on account of such contractual arrangement, the assessee cannot ask the Revenue to recover the tax dues from a third party or wait for discharge of the liability by the assessee till it has recovered the amount from its contractors.
6.1. We further find that Hon'ble Apex Court has approved of the above decision by the Hon'ble High Court of Delhi vide their Order in SLA CC No.284/2015 holding that:
The Delhi High Court in its impugned order had held that the assessee could contractually transfer their Service Tax liability to a third party but on account thereof, could not ask the Revenue to recover it from the third party or wait for discharge of liability till they receive it from the contractors. The assessee has to discharge the Service Tax liability in terms of the statutory provisions.
It was held that the plea of 'bona fide belief' that the contractors engaged by them had agreed to pay Service Tax, would not be available to a Public Sector Undertaking. They should have been more vigilant in compliance with their statutory obligations. Since they failed to submit prescribed returns, extended period of limitation was rightly invoked for demanding Service Tax. It was further held that though it was improper for an assessee to insist that they would deposit Service Tax only when contractors discharge their liability. Since, they were raising bills on contractors to claim Service Tax in terms of contracts and collections so made were deposited 17 ST/57012/2013 in Government account, it cannot be said that they attempted to evade tax, they being dependent on Government grants, there was reasonable cause for default in paying Service Tax within the prescribed time. Hence, they were not liable to penalty in terms of Sections 78 and 80 of the Finance Act, 1994.
6.2. However, we find that the appellants have deposited the demanded service tax of Rs.31,08,454/- along with interest of Rs.33,15,685/- and penalty of Rs.31,10,455/- in terms of Stay Order No.50505/2015 passed by this Bench.
7. Now, we would like to address the issue of limitation. The appellants submit that they have not suppressed any relevant information from the Department; they had bona fide belief in view of the agreement with their customer i.e. M/s Pisces Communication that all the applicable taxes etc. are to be borne by their customer;
immediately on receipt of communication from the Department, they have taken steps to get themselves registered; being a Government Department, they could not get PAN number and TAN number was readily available and therefore, there was a delay in obtaining registration; therefore, extended period cannot be invoked. They also submit that being a Government Department, it cannot be alleged that they have an intent to evade payment of duty as no individual person stands to gain in avoiding the payment of service tax by a State Government Department to a Central Government Department.
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8. We find that this Bench of the Tribunal in the case of Himachal Pradesh Road Transport Corporation in Service Tax Appeal No. 56993 of 2013 held that:
6.2 As far as the limitation is concerned, we find that since the appellant is a State Government Undertaking it cannot be inferred that they had an intention to evade payment of tax. This Tribunal in the case of M/s Chandigarh Transport Corporation cited (supra) has held in paras 8 and
9 as under:-
"8. We find that learned Counsel for the appellants has taken a preliminary objection that the issue is entirely time barred as the appellants are a statutory undertaking and therefore, it cannot be alleged that they have an intent to evade payment of service tax. We find that the submission is acceptable. We find that whereas the demands are relatable to the period 01.05.2006 to 30.06.2008. Show cause notice has been issued on 21.01.2010, clearly beyond the limitation. On this count too, major portion of the demand raised in the show cause notice cannot be upheld. More so, penalties imposed cannot be sustained.
9. We also find that this Bench in the case of Punjab State Grain Procurement Corporation Ltd. in Service Tax Appeal No.59406 of 2013 held that:
5. Coming to the issue of limitation, the show-
cause notice other than stating that the noticee has suppressed the material facts, from the 19 ST/57012/2013 Department with the intent to evade payment of service tax and that had the matter being not detected by the audit from the records of the noticee taxable value would have escaped assessment, no positive act of omission or commission on the part of the appellants with intent to evade payment of duty has been either mentioned or evidenced or discussed in the show- cause notice or in the impugned order. Under the circumstances, the appellants, moreover, being a Government Corporation cannot be alleged to have suppressed material fact with intent to evade payment of tax. We find that Courts and Tribunal have been consistently holding that in respect of Government Corporations, Companies etc. intent to evade payment of service tax cannot be alleged. Moreover, we find that during the relevant period, there was lot of confusion in the minds of the assessee regarding the taxability of goods transport operators; therefore, we find that extended period cannot be invoked and to that extent, the appellants succeed on limitation.
10. We further find that the Principal Bench of the Tribunal in the case of G.D. Goenka Private Limited vide Final Order No.51088/2023 dated 21.08.2023 held as follows:
12. Section 73 provides for recovery of service tax not levied, not paid, short levied, short paid or erroneously refunded. The provisions of this section apply mutatis mutandis to irregularly availed CENVAT credit recoverable under Rule 14 of CCR. This section permits invoking extended period of limitation to raise a demand on the following grounds:
a) Fraud; or
b) Collusion; or 20 ST/57012/2013
c) Wilful misstatement; or
d) Suppression of facts; or
e) Violation of the Act or Rules with an intent to evade payment.
13. There is no other ground on which the extended period of limitation can be invoked. Evidently, fraud, collusion, wilful misstatement and violation of Act or Rules with an intent all have the mens rea built into them and without the mens rea, they cannot be invoked.
Suppression of facts has also been held through a series of judicial pronouncements to mean not mere omission but an act of suppression with an intent. In other words, without an intent being established, extended period of limitation cannot be invoked. In Pushpam pharmaceuticals company vs Collector of Central Excise Mumbai5, the Supreme Court examined Section 11A of the Central Excise Act, 1944 which was worded similar to Section 73 of the Finance Act, 1994 and held as follows:
" 4. Section 11A empowers the Department to re open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known.
In normal understanding it is not different that what is explained in various dictionaries unless of course the context in which it has been used indicates otherwise. A perusal of the 21 ST/57012/2013 proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it 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."
11. In the instant case before us, we find that extended period has been invoked for the reasons that the appellants have provided a taxable service but did not get themselves registered and did not pay applicable service tax. Further, they have not registered themselves and pay applicable service tax even after being told by the Department. It is the defence of the appellants that they were under a bona fide belief in view of the agreement they have entered into with Pisces Communication Ltd wherein at Clause 3 (c), it was categorically mentioned that the taxes & levies, if any, payable on the advertisements to the State Govt., Govt. of India, other Govts. or Administration or Authorities shall be paid by the contractor and not by the Transport Department. The contractor shall be liable to make their own arrangements for payment of such Lives/levies. The 22 ST/57012/2013 contractor will be fully responsible for the consequences for non- payment of any Bach taxes/levies.
12. We find that in view of the provisions of Section 73, in view of the jurisprudence evolved over a period of time and in view of the facts and circumstances of the case, we find that there is nothing on record to show that the appellant- State Government Department have indulged in any suppression, wilful mis-statement, collusion etc. with intent to evade payment of taxes. Moreover, as per the cases discussed above and the submissions of the appellants, the appellant being a Government Department, whether or not, fitting into the definition of "a person" in terms of Section 65 (105) (zzzm), it cannot be alleged that they have an intent to evade payment of duty. We find that Hon'ble High Court of Delhi in the case of Delhi Transport Corporation (supra) upheld the invocation of extended period on the ground that claim of bona fide belief cannot be accepted and the appellant being a Public Sector Undertaking should have been more vigilant in the compliance of statutory obligations. We find that Hon'ble High Court had no occasion to go into the intent behind the non-payment of service tax. Moreover, Delhi Transport Corporation being a Public Sector Undertaking stands on a different footing than the appellant, in the impugned case before us, Director General of State Transport. Therefore, we are of the considered opinion that the findings in the case of Delhi Transport Corporation (supra) cannot be applied to the appellant herein. In view of our discussion above, we find that Revenue has not made 23 ST/57012/2013 out any case for invocation of extended period of limitation against the appellant. Thus, the appellants succeed on limitation.
13. In the result, the appeal is allowed on limitation while holding against the appellants on merits.
(Order pronounced in the open court on 22/07/2025) (S. S. GARG) MEMBER (JUDICIAL) (P. ANJANI KUMAR) MEMBER (TECHNICAL) PK