Custom, Excise & Service Tax Tribunal
Digilife Distribution Marketing ... vs Meerut-I on 30 June, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.II
Service Tax Appeal No.70668 of 2024
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APPL-623-23-24, dated -
26/03/2024 passed by Commissioner (Appeals) CGST & Central Excise,
Noida)
M/s HCL Infosystems Ltd. .....Appellant
(Earlier Known as Digilife Distribution Marketing Services Ltd.
A-11, Sector-03, Gautam Buddha Nagar, Uttar Pradesh 201301)
VERSUS
Commissioner, CGST (Audit), Meerut ....Respondent
(Opposite C.C.S. University,
Mangal Pandey Nagar, Meerut
Uttar Pradesh 250002)
APPEARANCE:
Shri Nikhil Gupta, Advocate for the Appellant
Shri Santosh Kumar, Authorized Representative for the Respondent
CORAM: HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NO.-70458/2025
DATE OF HEARING : 30.06.2025
DATE OF DECISION : 30.06.2025
SANJIV SRIVASTAVA:
This appeal is directed against the Order-in-Appeal
No.NOI-EXCUS-001-APPL-623-23-24, dated -26/03/2024 passed
by Commissioner (Appeals) CGST & Central Excise, Noida. By
the impugned order following has been held:-
ORDER
"I hereby set aside Order-in-original No. 99/DC/ST-TPI/CGST/DIV- IV/NOIDA/2023-24 dated 30.10.2023 passed by the Deputy Commissioner, Central GST Audit Commissionerate, Meerut. Instant Appeal No. 271/ST/NOIDA/APPL/NOI/2023-24 dated 2 Service Tax Appeal No.70668 of 2024 04.01.2024, filed by M/s Digilife Distribution Marketing Services Ltd., E-4,5,6, Sector-11, Noida-201301 (U.P.) is disposed of by way of remand the case back to the adjudicating authority with the directions to re-ascertain the demand for the period of October 2014 to March 2015 as discussed above and pass a fresh order after considering and taking into account all the submissions of the appellant, after giving opportunity of being heard to the appellant. The appellant is also directed to submit copies of all the relevant relied upon documents before the adjudicating authority when the case is posted for hearing and decision."
2.1 The Appellant was registered with the Service Tax Department having Service Tax Registration No. AACCH0076JST001 for providing the taxable services defined under erstwhile Section 65B(44) of the erstwhile Finance Act, 1994.
2.2 On scrutiny of third party data, which was received from the Income Tax Department for the F. Y. 2014-15, the Respondent-Department observed difference between the values of sale of services declared in their Income Tax Return (ITR data), values for TDS (TDS data) and Total Gross value provided in Service Tax Returns (STR data). The details of the said difference is under:-
Total amount paid / Gross value of Difference Service Tax Financial Year credited under services provided between value of due on the (Rate of Section 194C, 194H, (as per STR) services higher value Service Tax) 1941, 194J as per (ITR/TDS) and (Inclusive of 26AS Gross value of Cesses) Services provided (in STR) a b C d = b-c e 2014-15 1,29,16,398 90,71,247 38,45,151 4,75,260 (12.36%) 2.3 A Show Cause Notice dated 29.12.2020 was issued to the Appellant asking them to show cause as to why:-
(i) The Service Tax amounting to Rs.4,75,260.00(Rupees Four Lacs Seventy Five Thousand Two Hundred Sixty Only) should not be demanded and recovered from them under proviso to Section 73(1) of the 3 Service Tax Appeal No.70668 of 2024 Act, 1994 read with Section 142, Section 173 and Section 174 of CGST Act, 2017.
(ii) The due interest on the amount of Service Tax mentioned at (i) above should not be demanded and recovered from them under Section 75 of the Finance Act, 1994 read with Section 142, Section 173 and Section 174 of CGST Act, 2017.
(iii) Penalty should not be imposed upon them under Section 78 of the Finance Act 1994 read with Section 142, Section 173 and Section 174 of CGST Act, 2017 for failure to pay service tax & suppressing the facts and value of taxable service with intent to evade payment of service tax.
(iv) Penalty should not be imposed upon them under Section 77(1)(c) of the Finance Act, 1994 read with Section 142, Section 173 and Section 174 of CGST Act, 2017 for not maintaining the proper records.
2.4 The show cause notice has been adjudicated as per the order in Order-in-Original No. 99/DC/ST-TPI/CGST/DIV- IV/NOIDA/2023-24 dated 30.10.2023, holding as follows:
ORDER (I) I confirm the demand of Service Tax amounting to Rs. 4,75,260/- (Rupees Four Lakh Seventy-Five Thousand Two Hundred and Sixty Only) and order to recover the same from M/s Digilife Distribution and Marketing Services Limited, E-4,5,6, SECTOR-11, NOIDA -201301 under the proviso to Section 73(1) of the Finance Act, 1994 read with Section 142, Section 173 and Section 174 of the CGST Act, 2017.
(II) I order to recover the interest as applicable under Section 75 of the Finance Act, 1994 read with Section 142, Section 173 and Section 174 of the CGST Act, 2017 from them on the above amount of Service Tax as mentioned above in (1).
4 Service Tax Appeal No.70668 of 2024 (III) I impose a penalty of Rs. 4,75,260/- (Rupees Four Lakh Seventy-Five Thousand Two Hundred and Sixty Only) on M/s Digilife Distribution and Marketing Services Limited under Section 78 of the Finance Act, 1994 read with Section 142, Section 173 and Section 174 of the CGST Act, 2017. If duty as confirmed at (1) above, interest and penalty paid within 30 days of receipt of this order then penalty amount stands reduced to 25%.
IV) I impose a penalty of Rs.10,000/- (Rupees Ten Thousand only) upon M/s Digilife Distribution and Marketing Services Limited under Section 77(1)(c) of the Finance Act, 1994 read with Section 142, Section 173 and Section 174 of the CGST Act, 2017 and also order for recovery of the same from the noticee.
2.5 Aggrieved Appellant has filed the appeal before the Commissioner Appeals who has modified the Order-In-Original by the impugned order as indicated in Para 1 above.
2.6 Aggrieved Appellant is before the Tribunal.
3.1 I have heard Shri Nikhil Gupta learned Advocate for the Appellant and Shri Santosh Kumar, learned Authorized Representative for the Revenue.
3.2 Arguing for the Appellant learned Counsel submits that the Commissioner (Appeals) have held demand for the first half year of the Financial Year 2014-15 to be barred by limitation and for the remaining half year he has remanded the matter holding that the extended period of limitation would be applicable for making the demand. No grounds for invocation of extended period of limitation has been stated in the Show Cause Notice or in the order of the Lower Authority. Demand for the first half is time barred than demand for the second half should be also time barred.
5 Service Tax Appeal No.70668 of 2024 The demand has been made entirely on the basis of the information received from the Income Tax Authorities without any further inquiry/investigation. In series of judgments it has been held that demand made simply on the basis of ITR/26AS statements is not sustainable. The Appellant got merged with the HCL Infosystems Limited as per the Order dated 10.08.2022 read with corrigendum dated 12.09.2022 of the National Company Law Tribunal (NCLT). After merger Appellant was not having any existence. This fact was brought to the notice of the Original Authority who has recorded the same in findings and confirmed a demand against a non-existent person which has been settled by the decisions of various Courts/Tribunals that such demand cannot be sustained.
3.3 Learned Departmental Representative has reiterated the findings recorded in the impugned order.
4.1 I have considered the impugned order alongwith the submissions made in the appeal and during the course of arguments.
4.2 learned Commissioner (Appeals) has recorded as follows in the impugned order:-
"8.1 As discussed supra, I find that the appellant had contravened the provisions of Rule 6 of Service Tax Rules 1994 read with Section 68(1) of the Act, In respect of income received against the provision of the services and have contravened the provisions of Rule 2(1)(d) and Rule 6 of Service Tax Rules 1994, Rule 2A of Service Tax (Determination of Value) Rules' 2006 read with Section 668, 66C and Section 68(2) of the Act. The appellant had also suppressed the material facts and figures related to services provided by then. The said material facts came to the knowledge of the department only when the respondent department got the income tax data of the appellant from CBDT under the data exchange policy. Had the data not given by the Income Tax Department, evasion of service tax on the amount so collected by the appellant against the 6 Service Tax Appeal No.70668 of 2024 provision of services would have not been unearthed by the respondent department. From the aforesaid, I find that in the case of evasion of service tax by way of fraud, collusion, willful misstatement and suppression of facts, provisions of extended period as provided under Section 73(1) of the Act are applicable.
8.2 In the above context, I rely on the case of Cosmic Dye Chemical Vs. Collector 1995 (75) ELT 721 (S.C.)- "the Hon'ble apex Court held that the intent to evade duty must be proved for invoking extended period of limitation." In this case as discussed supra the appellant suppress the fact with intent to evade the service tax. In the case of Anand Nishikawa Company Ltd. Vs. Commissioner, Meerut 2005 (188) ELT 149 (S.C.), the Hon'ble Supreme Court has held that "suppression of facts can have only one meaning that the correct information was not disclosed deliberately to evade the payment of duty." In the case of M/s. Lalit Enterprises [2010 (17) STR 370 (Tri Chennai)], it was held that in the light of the fact that on verification of the records the Department came to know-" that the appellants did not disclose receipt of service charges, therefore, five years period has been correctly invoked and applied against the appellant as the case falls within the proviso to Section 73(1) of the Finance Act, 1994 and the demand is not barred by limitation. In the case of M/s Mahavir Plastics [2010 (255) ELT 241(Tri Mumbai)], It has been held that "if facts are gathered by department in subsequent investigation, it is not correct to say that the relevant facts were known to the department during the period of dispute, in such a situation, the decisions of the Apex Court cited by the Id. Counsel would not be of any avail to the appellant."
8.3 I find that the appellant failed to declare correct value of services rendered by them and subsequently failed to declare their service tax liability in the ST-3 returns filed by them for the relevant period. I find that in the present regime of liberalization, self-assessment and filing of ST-3 returns online, the said appellant failed to provide correct information to the department and therefore the department would come to know about such short-payment of service tax only during audit or preventive/other checks. As already held above that the appellant cannot be presumed to have acquired a wrong interpretation of the legal provisions, 7 Service Tax Appeal No.70668 of 2024 and thus is definitely a deliberate non-disclosure of correct fact and as such suppression of fact. As the appellant had indulged into suppression with the intent to evade the payment of tax. These facts came into notice of the Revenue only when the enquiry was initiated against them. Therefore, the extended period of limitation as provided under proviso to section 73(1) of the Act has rightly been invoked.
8.4 I further observe that the issue has been clarified by the Hon'ble Supreme Court of India vide their Judgement dated 27.04.2021 in Miscellaneous Application No. 665/2021 in SWM (C) No. 3 of 2020 whereby the Hon'ble Supreme Court has issued the following directions-
"We, therefore, restore the order dated 23rd March, 2020 and in continuation of the order dated 8th March, 2021 direct that the period(s) of limitation, as prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further orders. It is further clarified that the period from 14th March, 2021 till further orders shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. We have passed this order in exercise of our powers under Article 142 read with Article 141 of the Constitution of India. Hence it shall be a binding order within the meaning of Article 141 on all Courts/Tribunals and Authorities."
I also find that the matter of extension of period of limitation under Section 168A of the CGST Act, 2017 was deliberated in the 43rd Meeting of GST Council, while providing various relaxations in the compliances for taxpayers, also recommended that wherever the timelines for actions have been extended by the Hon'ble Supreme Court, the same would apply. In this context the CBIC vide Circular No. 157/13/2021-GST dated 20/07/2021 on the subject matter of limitations 8 Service Tax Appeal No.70668 of 2024 of time lines under GST Law, has clarified the following:-
(ii) For the purpose of counting the period(s) of limitation for filing of appeals before any appellate authority under the GST Law, the limitation stands extended till further orders as ordered by the Hon'ble Supreme Court in Suo Motu Writ Petition (Civil) 3 of 2020 vide order dated 27th April 2021. Thus, as on date, the Orders of the Hon'ble Supreme Court apply to appeals, reviews, revisions etc....
Accordingly, the SCN issued by the department to the appellant on 29.12.2020 is, therefore, considered to be issued within limitation period.
8.5 In view of above, I hold that the present demand is considered to be issued within limitation period except for the period of April 2014 to September 2014."
4.3 Undisputedly, the Appellant was filing the Returns during the period of dispute and have filed return for both first half and second half of the Financial Year 2014-15 by declaring the value of taxable service and paying due service tax on the same. On the basis of the figures provided by the Income Tax Authority demand has been made except that Appellant has suppressed material fact from the Department nothing has been stated in the Show Cause Notice to establish the charge of suppression against the Appellant.
4.4 It has been constantly held that mere bald allegation of suppression is not sufficient to establish the charge of suppression for invocation of extended period of limitation for making the demand. The charge of suppression should be shown to be willful and with intention to evade payment of taxes. In the present case, I do not find anything to establish that for the second half of the Financial Year 2014-15 also extended period of limitation could have been invoked. Show cause notice on the issue of invoking extended period of limitation records as follows:
"6. And whereas, the party had suppressed material facts and contravened the provisions of the Finance Act, 9 Service Tax Appeal No.70668 of 2024 1994 and the Rules of the Service Tax Rules, 1994 with intent to evade payment of Service Tax despite being engaged in providing taxable services and receiving payments and not depositing Service Tax with the Government exchequer. Had the Department not initiated the inquiry against the party on the basis of the third-party information, the said non-payment of service tax could not be unearthed. The party had wilfully suppressed their taxable income from the department with intent to evade payment of Service Tax. Therefore, extended period of limitation of five years is invokable in this case. Therefore, proviso to Section 73(1) of the Finance Act, 1994 along with Section 75 of the Act for appropriate interest read with Section 142and Section 174 of CGST Act, 2017 is invokable in this case."
4.5 Hon'ble Supreme Court has in case of Uniworth Textiles Ltd. [2013 (288) E.L.T. 161 (S.C.)] held as follows:
12. We have heard both sides, Mr. R.P. Bhatt, learned senior counsel, appearing on behalf of the appellant, and Mr. Mukul Gupta, learned senior counsel appearing on behalf of the Revenue. We are not convinced by the reasoning of the Tribunal. The conclusion that mere non-
payment of duties is equivalent to collusion or willful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of non-payment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or willful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso.
13. This Court, in Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay - 1995 Supp (3) SCC 462 = 1995 (78) E.L.T. 401 (S.C.), while interpreting the proviso of an analogous provision in Section 11A of The Central Excise Act, 1944, which is pari materia to the proviso to Section 28 discussed above, made the following observations :
10 Service Tax Appeal No.70668 of 2024 "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 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."
[Emphasis supplied]
14. In Sarabhai M. Chemicals v. Commissioner of Central Excise, Vadodara - (2005) 2 SCC 168 = 2005 (179) E.L.T. 3 (S.C.), a three-judge Bench of this Court, while referring to the observations extracted above, echoed the following views :
"23. Now coming to the question of limitation, at the outset, we wish to clarify that there are two concepts which are required to be kept in mind for the purposes of deciding this case. Reopening of approvals/assessments is different from raising of demand in relation to the extended period of limitation. Under section 11A(1) of the Central Excise Act, 1944, a proper officer can reopen the approvals/assessments in cases of escapement of duty on account of non-levy, non-payment, short-levy, short- payment or erroneous refund, subject to it being done within one year from the relevant date. On the other hand, the demand for duty in relation to extended period is mentioned in the proviso to section 11A(1). Under that proviso, in cases where excise duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded on account of fraud, collusion or wilful mis- statement or suppression of facts, or in contravention of 11 Service Tax Appeal No.70668 of 2024 any provision of the Act or Rules with the intent to evade payment of duty, demand can be made within five years from the relevant date. In the present case, we are concerned with the proviso to section 11A(1).
24. In the case of Cosmic Dye Chemical v. Collector of Central Excise, Bombay (1995) 6 SCC 117, this Court held that intention to evade duty must be proved for invoking the proviso to section 11A(1) for extended period of limitation. It has been further held that intent to evade duty is built into the expression "fraud and collusion" but mis-statement and suppression is qualified by the preceding word "wilful". Therefore, it is not correct to say that there can be suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for invoking the proviso to section 11A.
25. In case of Pushpam Pharmaceuticals Company v. C.C.E. [1995 (78) E.L.T. 401 (S.C.)], this Court has held that the extended period of five years under the proviso to section 11A(1) is not applicable just for any omission on the part of the assessee, unless it is a deliberate attempt 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 constitute suppression of fact."
15. In Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise, Meerut - (2005) 7 SCC 749 = 2005 (188) E.L.T. 149 (S.C.), while again referring to the observations made in Pushpam Pharmaceuticals Company (supra), this Court clarified the requirements of the proviso to Section 11-A, as follows :-
"26... This Court in the case of Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay (supra), 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 12 Service Tax Appeal No.70668 of 2024 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, 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 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 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 the proviso to Section 11A of the Act."
16. In Collector of Central Excise v. H.M.M. Ltd. - 1995 Supp (3) SCC 322 = 1995 (76) E.L.T. 497 (S.C.), this Court held that mere non-disclosure of certain items assessable to duty does not tantamount to the mala fides elucidated in the proviso to Section 11A(1) of the Central Excise Act, 1944. It enunciated the principle in the following way :-
"The mere non-declaration of the waste/by-product in their classification list cannot establish any wilful withholding of vital information for the purpose of evasion of excise duty due on the said product. There could be, counsel contended, bona fide belief on the part of the assessee that the said waste or by-product did not attract excise duty and hence it may not have been included in their classification list. But that per se cannot go to prove that there was the intention to evade payment of duty or that the assessee was guilty of fraud, collusion, misconduct or suppression to attract the proviso to Section 11A(1) of the Act. There is considerable force in this contention."
Therefore, if non-disclosure of certain items assessable to duty does not invite the wrath of the proviso, we fail to understand how the non-payment of duty on disclosed items, after inquiry from the concerned department meets, with that fate.
13 Service Tax Appeal No.70668 of 2024
17. In fact, the Act contemplates a positive action which betrays a negative intention of willful default. The same was held by Easland Combines, Coimbatore v. The Collector of Central Excise, Coimbatore - (2003) 3 SCC 410 = 2003 (152) E.L.T. 39 (S.C.) wherein this Court held :-
"31. It is settled law that for invoking the extended period of limitation duty should not have been paid, short levied or short paid or erroneously refunded because of either fraud, collusion, wilful misstatement, suppression of facts or contravention of any provision or rules. This Court has held that these ingredients postulate a positive act and, therefore, mere failure to pay duty and/or take out a licence which is not due to any fraud, collusion or willful misstatement or suppression of fact or contravention of any provision is not sufficient to attract the extended period of limitation." [Emphasis supplied]
18. We are in complete agreement with the principle enunciated in the above decisions, in light of the proviso to Section 11A of the Central Excise Act, 1944. However, before extending it to the Act, we would like to point out the niceties that separate the analogous provisions of the two, an issue which received the indulgence of this Court in Associated Cement Companies Ltd. v. Commissioner of Customs - (2001) 4 SCC 593, at page 619 = 2001 (128) E.L.T. 21 (S.C.) in the following words :-
"53... Our attention was drawn to the cases of CCE v. Chemphar Drugs and Liniments - (1989) 2 SCC 127, Cosmic Dye Chemical v. CCE - (1995) 6 SCC 117, Padmini Products v. CCE - (1989) 4 SCC 275, T.N. Housing Board v. CCE - 1995 Supp (1) SCC 50 and CCE v. H.M.M. Ltd. (supra). In all these cases the Court was concerned with the applicability of the proviso to Section 11-A of the Central Excise Act which, like in the case of the Customs Act, contemplated the increase in the period of limitation for issuing a show-cause notice in the case of non-levy or short-levy to five years from a normal period of six months...
54. While interpreting the said provision in each of the aforesaid cases, it was observed by this Court that for proviso to Section 11-A to be invoked, the intention to evade payment of duty must be shown. This has been clearly brought out in Cosmic Dye Chemical case where the Tribunal had held that so far as fraud, suppression or misstatement of facts was concerned the question of 14 Service Tax Appeal No.70668 of 2024 intent was immaterial. While disagreeing with the aforesaid interpretation this Court at p. 119 observed as follows : (SCC para 6) '6. Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as misstatement or suppression of facts are concerned, they are clearly qualified by the word 'wilful' preceding the words 'misstatement or suppression of facts' which means with intent to evade duty. The next set of words 'contravention of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intent to evade payment of duty'. It is, therefore, not correct to say that there can be a suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11-A. Misstatement or suppression of fact must be wilful.' The aforesaid observations show that the words "with intent to evade payment of duty" were of utmost relevance while construing the earlier expression regarding the misstatement or suppression of facts contained in the proviso. Reading the proviso as a whole the Court held that intent to evade duty was essentially before the proviso could be invoked.
55. Though it was sought to be contended that Section 28 of the Customs Act is in pari materia with Section 11-A of the Excise Act, we find there is one material difference in the language of the two provisions and that is the words "with intent to evade payment of duty" occurring in proviso to Section 11-A of the Excise Act which are missing in Section 28(1) of the Customs Act and the proviso in particular...
56. The proviso to Section 28 can inter alia be invoked when any duty has not been levied or has been short- levied by reason of collusion or any wilful misstatement or suppression of facts by the importer or the exporter, his agent or employee. Even if both the expressions "misstatement" and "suppression of facts" are to be qualified by the word "wilful", as was done in the Cosmic Dye Chemical case while construing the proviso to Section 11-A, the making of such a wilful misstatement or suppression of facts would attract the provisions of Section 28 of the Customs Act. In each of these appeals it 15 Service Tax Appeal No.70668 of 2024 will have to be seen as a fact whether there has been a non-levy or short-levy and whether that has been by reason of collusion or any wilful misstatement or suppression of facts by the importer or his agent or employee." [Emphasis supplied]
19. Thus, Section 28 of the Act clearly contemplates two situations, viz. inadvertent non-payment and deliberate default. The former is canvassed in the main body of Section 28 of the Act and is met with a limitation period of six months, whereas the latter, finds abode in the proviso to the section and faces a limitation period of five years. For the operation of the proviso, the intention to deliberately default is a mandatory prerequisite.
20. This Court in Aban Loyd Chiles Offshore Limited and Ors. v. Commissioner of Customs, Maharashtra - (2006) 6 SCC 482 = 2006 (200) E.L.T. 370 (S.C.) observed :-
"The proviso to Section 28(1) can be invoked where the payment of duty has escaped by reason of collusion or any willful misstatement or suppression of facts. So far as "misstatement or suppression of facts" are concerned, they are qualified by the word "willful". The word "willful"
preceding the words "misstatement or suppression of facts" clearly spells out that there has to be an intention on the part of the assessee to evade the duty."
21. The Revenue contended that of the three categories, the conduct of the appellant falls under the case of "willful misstatement" and pointed to the use of the word "misutilizing" in the following statement found in the order of the Commissioner of Customs, Raipur in furtherance of its claim :
"The noticee procured 742.51 kl of furnace oil valued at Rs. 54,57,357/- without payment of customs duty by misutilizing the facility available to them under Notification No. 53/97-Cus., dated 3-6-1997"
22. We are not persuaded to agree that this observation by the Commissioner, unfounded on any material fact or evidence, points to a finding of collusion or suppression or misstatement. The use of the word "willful" introduces a mental element and hence, requires looking into the mind of the appellant by gauging its actions, which is an indication of one's state of mind. Black's Law Dictionary, Sixth Edition (pp 1599) defines "willful" in the following manner :-
16 Service Tax Appeal No.70668 of 2024 "Willful. Proceeding from a conscious motion of the will;
voluntary; knowingly; deliberate. Intending the result which actually comes to pass...
An act or omission is "willfully" done, if done voluntarily and intentionally and with the specific intent to do something the law forbids, or with the specific intent to fail to do something the law requires to be done..."
23. In the present case, from the evidence adduced by the appellant, one will draw an inference of bona fide conduct in favour of the appellant. The appellant laboured under the very doubt which forms the basis of the issue before us and hence, decided to address it to the concerned authority, the Development Commissioner, thus, in a sense offering its activities to assessment. The Development Commissioner answered in favour of the appellant and in its reply, even quoted a letter by the Ministry of Commerce in favour of an exemption the appellant was seeking, which anybody would have found satisfactory. Only on receiving this satisfactory reply did the appellant decide to claim exemption. Even if one were to accept the argument that the Development Commissioner was perhaps not the most suitable repository of the answers to the queries that the appellant laboured under, it does not take away from the bona fide conduct of the appellant. It still reflects the fact that the appellant made efforts in pursuit of adherence to the law rather than its breach.
24. Further, we are not convinced with the finding of the Tribunal which placed the onus of providing evidence in support of bona fide conduct, by observing that "the appellants had not brought anything on record" to prove their claim of bona fide conduct, on the appellant. It is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. This Court observed in Union of India v. Ashok Kumar & Ors. - (2005) 8 SCC 760 that "it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility."
25. Moreover, this Court, through a catena of decisions, has held that the proviso to Section 28 of the Act finds application only when specific and explicit averments challenging the fides of the conduct of the assessee are 17 Service Tax Appeal No.70668 of 2024 made in the show cause notice, a requirement that the show cause notice in the present case fails to meet. In Aban Loyd Chiles Offshore Limited and Ors. (supra), this Court made the following observations :
"21. This Court while interpreting Section 11-A of the Central Excise Act in Collector of Central Excise v. H.M.M. Ltd. (supra) has observed that in order to attract the proviso to Section 11-A(1) it must be shown that the excise duty escaped by reason of fraud, collusion or willful misstatement of suppression of fact with intent to evade the payment of duty. It has been observed :
'...Therefore, in order to attract the proviso to Section 11-A(1) it must be alleged in the show-cause notice that the duty of excise had not been levied or paid by reason of fraud, collusion or willful misstatement or suppression of fact on the part of the assessee or by reason of contravention of any of the provisions of the Act or of the Rules made thereunder with intent to evade payment of duties by such person or his agent. There is no such averment to be found in the show cause notice. There is no averment that the duty of excise had been intentionally evaded or that fraud or collusion had been practiced or that the assessee was guilty of wilful misstatement or suppression of fact. In the absence of any such averments in the show-cause notice it is difficult to understand how the Revenue could sustain the notice under the proviso to Section 11-A(1) of the Act.' It was held that the show cause notice must put the assessee to notice which of the various omissions or commissions stated in the proviso is committed to extend the period from six months to five years. That unless the assessee is put to notice the assessee would have no opportunity to meet the case of the Department. It was held :
...There is considerable force in this contention. If the department proposes to invoke the proviso to Section 11- A(1), the show-cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and
18 Service Tax Appeal No.70668 of 2024 if the Excise Department places reliance on the proviso it must be specifically stated in the show-cause notice which is the allegation against the assessee falling within the four corners of the said proviso...." (Emphasis supplied)
26. Hence, on account of the fact that the burden of proof of proving mala fide conduct under the proviso to Section 28 of the Act lies with the Revenue; that in furtherance of the same, no specific averments find a mention in the show cause notice which is a mandatory requirement for commencement of action under the said proviso; and that nothing on record displays a willful default on the part of the appellant, we hold that the extended period of limitation under the said provision could not be invoked against the appellant.
4.6 In case of Tarun Gupta [Final Order No 59773-59774/2024 dated 4.12.2024 in ST/50544, 51815/2017] following has been observed by Delhi Bench:
"31. What, therefore, transpires from the aforesaid decisions is that there can be a difference of opinion between the department and an assessee. An assessee may genuinely believe that duty is not leviable, while the department may believe that duty is leviable. The assessee may, therefore, not pay duty in the self-assessment carried out by the assessee, but this would not mean that the assessee has wilfully suppressed facts. To invoke the extended period of limitation, atleast one of the five necessary elements must be established and their existence cannot be presumed merely because the assessee is operating under self assessment. If some duty escapes assessment, the officers of the department can always call upon the assessee to submit further documents and he may also conduct an enquiry. In fact when an audit is conducted, the officers of the audit team scrutinize the records and, therefore, notice should be issued within the stipulated time from the date the audit was conducted. Even otherwise, merely because facts came to light only during the audit does not prove that there is an intent on the part of the assessee to evade payment of duty.
32. In the present case, as noticed above, all that has been stated in paragraphs 9 and 12 of the show cause notice is that the appellant received an amount for the period 2008- 09 to 2011-12 for the three taxable services and since the appellant did not provide the required documents it 19 Service Tax Appeal No.70668 of 2024 suppressed facts from the department with intent to evade payment of service tax. Though the appellant specifically denied that any facts had been suppressed, much less with an intention to evade payment of service tax, the Joint Commissioner merely observed that the fact of providing taxable service would not have come to the notice of the department had investigation not been initiated by the department and it is for this reason that the Joint Commissioner held that the appellant had willfully suppressed material facts from the department with intent to evade payment of service tax. The Commissioner (Appeals) held that there was no infirmity with the issue of demand as the period of demand was within five years.
33. It cannot be alleged by the department that facts were not in the knowledge of the department since earlier also a show cause notice dated 01.10.2009 had been issued by the department to the appellant for the period from 2004-05 to March 2008 proposing demand under the same heads as in the present appeal. There is, therefore, no reason as to why the show cause notice should have been issued beyond the normal period of limitation for the period from April 2012 to March 2013, nor there is any justification for issuing the show cause notice dated 22.10.2014 for the subsequent period from April 2013 to March 2014. It is, therefore, clearly a case where the facts were in the knowledge of the department and the department cannot allege that facts had been suppressed. In any case, even if it is assumed that facts were suppressed by the appellant then too no reason has been assigned in the orders passed by the Joint Commissioner or the Commissioner (Appeals) that such suppression was with an intent to evade payment of service tax. This apart, service tax has been demanded on the basis of profit and loss account and balance sheet, which are public documents which the department could have ascertained. The issue involved in this appeal also relates to interpretation of law. The decisions referred to above have clearly held that in such circumstances there can be no suppression of facts with an intent to evade payment of service tax.
34. The impugned orders dated 16.11.2016 and 17.08.2017 passed by the Commissioner (Appeals), therefore, deserve to be set aside on the sole ground that the extended period of limitation contemplated under the proviso to section 73 (1) of the Finance Act could not have been invoked in the facts and circumstances of the case."
20 Service Tax Appeal No.70668 of 2024 4.7 As I am deciding the issue on the ground of limitation, I have not considered other arguments advanced by the counsel for the Appellant at the time of argument.
5.1 Appeal is allowed.
(Operative part of the order is pronounced in open court) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) Nihal