Custom, Excise & Service Tax Tribunal
Digital Infusion Private Limited vs Commissioner, Cgst-Delhi East on 25 August, 2023
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH, COURT NO. I
SERVICE TAX APPEAL NO. 51858 OF 2021
[Arising out of the Order-in-Appeal No. 05/ST/APPEAL-1/EAST/2021 dated
25/08/2021 passed by The Commissioner (Appeals), Central Goods and Service
Tax, Delhi.]
M/s Digital Infusion Private Limited, Appellant
104, First Floor, Imperial Court Tower - II,
Jaypee Wish Town, Sector - 128,
Noida - 201 304.
VERSUS
Commissioner, CGST, Respondent
Delhi East Commissionerate, C.R. Building, New Delhi.
APPEARANCE Shri Puneet Rai, Advocate - for the appellant. Shri S.K. Meena, Authorized Representative (DR) - for the Department CORAM: HON'BLE SHRI JUSTICE DILIP GUPTA, PRESIDENT HON'BLE SHRI P.V. SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NO. 51159/2023 DATE OF HEARING: 25.08.2023 JUSTICE DILIP GUPTA:
M/s Digital Infusion Private Limited1 is aggrieved by the order dated 25.08.2021 passed by the Commissioner (Appeals) by which the appeal filed by the appellant to assail the order dated 10.12.2020 passed by the Adjudicating Authority has been disposed of by dropping a portion of the demand and confirming the rest of the demand.
2. It transpires from the records that the appellant provided Internet Telecommunication service and also sold space for
1. appellant 2 ST/51858/2021 advertisement. Sale of space for advertisement became taxable w.e.f. 01.10.2014 in terms of a notification dated 25.08.2014. The appellant was required to discharge the service tax liability under the reverse charge mechanism on import of this service.
3. The department conducted a verification of the records of the appellant for the period from April 2014 to June 2017 and issued a notice dated 20.02.2017 alleging that the appellant failed to deposit the service tax as a service recipient on import of the service. The appellant submitted a reply dated 11.04.2017 to the department and provided details of the facts stated by the appellant in the ST-3 returns for the period April 2014 to April 2017. The appellant pointed out that it was also providing output service to the Indian Institutes, for which it was required to pay service tax which it paid in time and the appellant also informed that it is for this reason it did not discharge the service tax liability on a reverse charge basis on the input service. The appellant also stated that from May 2017 it had started discharging service tax liability on a reverse charge basis on the input service and took credit while providing output service.
4. Subsequently on 26.07.2017 an audit was also conducted and the observations of the audit team were communicated to the appellant by a letter dated 26.07.2019. The issue that was raised was regarding non-payment of service tax on input services on reverse charge mechanism. The appellant filed a response to the aforesaid audit observations again pointing out facts which it had pointed out while responding to the notice dated 20.02.2017 sent in connection with the verification of records.
5. It was only on 23.06.2020 that a show cause notice was issued to the appellant for not paying service tax on reverse charge basis by 3 ST/51858/2021 invoking the extended period of limitation contemplated under the proviso to section 73 (1) of the Finance Act, 19942.
6. The appellant filed a reply to the show cause notice and apart from contending that service tax could not have been demanded also contended that the extended period of limitation could not have been invoked in the facts and circumstances of the case. The submissions advanced by the appellant were not accepted by the Adjudicating Authority and by an order dated 10.12.2020, the demand was confirmed with interest and penalty.
7. Feeling aggrieved, the appellant filed an appeal before the Commissioner (Appeals), who by order dated 25.08.2021 has substantially confirmed the demand, except the demand of Rs. 3,51,324/- that was raised for a period even beyond 5 years.
8. This appeal has been filed to assail the aforesaid order dated 25.08.2021 to extent it has confirmed the demand of service tax, penalty and interest.
9. Shri Puneet Rai, learned counsel appearing for the appellant submitted that though the appellant was required to discharge the service tax liability on the input service on a reverse charge basis, but the appellant did not do so as immediately thereafter output service was provided on which the appellant paid service tax. Learned counsel also submitted that in any view of the matter the extended period of limitation contemplated under the proviso to section 73 (1) of the Finance Act could not have been invoked. Elaborating this submission, learned counsel submitted that the appellant had pointed out the correct facts to the department when the verification of records was carried out on 11.04.2017 and,
2. the Finance Act 4 ST/51858/2021 therefore, the show cause notice dated 23.06.2020 could not have been issued at such a belated stage invoking the extended period of limitation by contending that the appellant had suppressed facts. Learned counsel for the appellant submitted that the entire demand that has been confirmed is for the extended period of limitation and so the impugned order deserves to be set aside.
10. Shri S.K. Meena, learned authorized representative appearing for the department has, however, supported the impugned order and has contended that when the appellant had admittedly suppressed material facts in the ST-3 returns, the Adjudicating Authority and the Commissioner (Appeals) were justified in holding that the extended period of limitation had been correctly invoked.
11. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered.
12. It is not in dispute that the entire demand that has been confirmed by the Commissioner (Appeals) falls in the extended period of limitation. It has, therefore, to be seen whether the extended period of limitation could have been invoked in the facts and circumstances of the case.
13. To consider the issue, it would be appropriate to examine the allegations contained in the show cause notice. It mentions that non payment of service tax on the inputs service came to the notice of the department during the verification of the records and since the assessee is working under a self assessment regime the onus is on the assessee to assess the tax payable but it failed to discharge this onus. The appellant, therefore, suppressed facts with wilful intent to evade payment of service tax. The relevant portion of the show 5 ST/51858/2021 cause notice that seeks to invoke the extended period of limitation is as reproduced:-
"9. It appears that the assessee was engaged in provision of taxable services. The non-payment of service tax on the mentioned services came to the notice only during the course of verification of records of the assessee by the officers, which would have otherwise gone unnoticed.
The assessee is working under the self-
assessment regime, hence, the onus of
assessment of tax payable is on the assessee. They have failed to discharge this onus with willful intent to evade the payment of Service Tax. Further, it also appears that the assessee had intentionally and suppressed/concealed the facts of non-payment of Service Tax on import of Services under RCM and also failed to show their liability in ST-3 return with a willful intent to evade the payment of service tax and/or availment and utilization of Cenvat Credit. But for the audit conducted, the facts of improper availment and utilization of Cenvat credit/non-payment of Service Tax would not have come to the knowledge of the department. Thus, by not disclosing the entire vital facts to the department by them, it appears that the provisions of proviso to Section 73 (1) of the Finance Act, 1994 read with Rule 14 of CENVAT Credit Rules, 2004 are invokable and so the demand and recovery can be made for short/non-payment of service tax/non- reversal of the amount under Rule 6 of the CCR for extended period of five years from the relevant date".
(emphasis supplied)
14. The Adjudicating Authority, in the order dated 10.12.2020, held that the extended period of limitation was correctly invoked. The Adjudication Authority merely reproduced the allegations contained 6 ST/51858/2021 in the show cause notice and the relevant portion of the order is as follows:-
"9. It appears that the assessee was engaged in provision of taxable services. The non-payment of service tax on the mentioned services came to the notice only during the course of verification of records of the assessee by the officers, which would have otherwise gone unnoticed.
The assessee is working under the self-
assessment regime, hence, the onus of
assessment of tax payable is on the assessee. They have failed to discharge this onus with willful intent to evade the payment of Service Tax. Further, it also appears that the assessee had intentionally and suppressed/concealed the facts of non-payment of Service Tax on import of Services under RCM and also failed to show their liability in ST-3 return with a willful intent to evade the payment of service tax and/or availment and utilization of Cenvat Credit. But for the audit conducted, the facts of improper availment and utilization of Cenvat credit/non-payment of Service Tax would not have come to the knowledge of the department. Thus, by not disclosing the entire vital facts to the department by them, it appears that the provisions of proviso to Section 73 (1) of the Finance Act, 1994 read with Rule 14 of CENVAT Credit Rules, 2004 are invokable and so the demand and recovery can be made for short/non- payment of service tax/non-reversal of the amount under Rule 6 of the CCR for extended period of five years from the relevant date".
(emphasis supplied)
15. The Commissioner (Appeals), while examining this issue, observed that it was evident that the appellant had not declared the service tax liability on import of services on reverse charge basis in the ST-3 returns, which would amount to suppression of facts and if 7 ST/51858/2021 the verification of the record had not been carried out, non-payment of service tax under the reverse charge basis would have gone undetected. The relevant portion of the order passed by the Commissioner (Appeals) is reproduced below:-
"11. I however find that in the era of self- assessment, the onus is also on the Appellant to reflect the complete and correct liability in their ST-3 return. Merely filing of returns in time any paying duty as declared, does not mean that all tax liabilities have been correctly discharged. In this context, the findings of AA in para 23.3 are relevant in this case:
"Had the department not investigated, the said taxable value would have been escaped assessment and might have resulted in non-payment of service tax".
The findings of the AA are that the non-payment of service tax under Reverse Charge Mechanism (RCM) first came to the notice of the Department only during the verification of financial records conducted by the officers of Central Excise and CGST, Audit - I Commissionerate, Delhi. The Appellant failed to reflect their liability under RCM in their ST-3 returns filed by them. This is also confirmed by the Appellant in their written submission at para 3.2 that they did not reflect import of services separately under a claim of bonafide belief. It is evident that the Appellant did not declare their liability on import of services under RCM in their ST-3 returns which amounts to suppression of such import of services by the Appellant. If verification of their record was not conducted, the non- payment of service tax under RCM could not have detected. Thus the AA has correctly invoked proviso to Section 73 (1) of Finance Act, 1994 for extended period of limitation".
(emphasis supplied)
16. It is not in dispute that the verification was carried out by the department of the records of the appellant and on 11.04.2017 the department was aware of the fact that the appellant had not 8 ST/51858/2021 discharged the service tax liability on the input services on reverse charge basis. The department also conducted an audit of the records of the appellant on 26.07.2019 and it is not the case of the department, and it cannot be, that the department came to know that the appellant had not discharged service tax liability on the input service on reverse charge basis only during the audit. Yet, the show cause notice was issued on 23.06.2020 i.e. almost after a period of three years and two months from the date the verification was conducted by the department.
17. The appellant may have suppressed information in the ST-3 returns filed by it regarding the liability to pay service tax on input service on reverse charge basis, though it had paid service tax while providing output service, but the department was aware of this fact on 11.04.2017. All that has been stated by Commissioner (Appeals) in the impugned order is that since it was evident that the appellant had not declared the liability on import of services under reverse charge in the ST-3 returns, this would amount to suppression of such import of services and if the verification of the records had not been conducted, non-payment of service tax could not have been detected.
18. There is no finding by the Commissioner (Appeals) that this fact had been suppressed by the appellant with an intent to evade payment of service tax. Suppression of a fact is not enough to invoke the extended period of limitation, for there has also to be an intent to evade of payment of service tax. Though the Commissioner (Appeals) has referred to the verification carried out on 11.04.2017, but the Commissioner (Appeals) completely failed to appreciate that if this was the position, then the department could have issued the 9 ST/51858/2021 show cause notice promptly soon after 11.04.2017 and there was no necessity at all to wait till 23.06.2020 to issue the show cause notice. It also transpires from the order passed by the Commissioner (Appeals) that a usual reason has been stated for invoking the extended period of limitation by merely mentioning that had the department not conducted the verification, non-payment of service tax would have gone undetected and that in the era of self- assessment, it is the duty of the appellant to state the correct facts.
19. The contention of the learned counsel for the appellant is that the necessary ingredients for invoking the larger period of limitation contemplated under the proviso to section 73 (1) of the Finance Act, namely wilful suppression of facts with an intent to evade payment of service tax do not exist and, therefore, the extended period of limitation could not have been invoked. Learned counsel submitted that the appellant actually believed that since it was discharging service tax liability on the output service, it was not required to pay service tax on the input service on reverse charge basis and in any case there can be no wilful suppression with intent to evade payment of service tax as the appellant would have taken credit of the tax paid on input service while providing the output service.
20. In order to appreciate this contention it would be appropriate to reproduce section 73 of the Finance Act as it stood at the relevant time. This section deals with recovery of service tax not levied or paid or short levied or short paid or erroneously refunded. It is as follows;
"73.(1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within one year from the relevant date, serve notice on 10 ST/51858/2021 the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid 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 "one year", the words "five years" had been substituted."
21. It would be seen from a perusal of sub-section (1) of section 73 of the Finance Act that where any service tax has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the service tax which has not been levied or paid, requiring him to show cause why he should not pay amount specified in the notice.
22. The „relevant date‟ has been defined in section 73 (6) of the Finance Act as follows;
73(6) For the purpose of this section, "relevant date"
means,-
(i) In the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short paid-
(a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the 11 ST/51858/2021 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;
23. 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.
24. 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 facts" under section 73(1) of the Finance Act, suppression of facts has still to be willful and with an intent to evade payment of service tax. The Supreme Court and the Delhi High Court have held that suppression of facts has to be "wilful‟ and there should also be an intent to evade payment of service tax.
25. Before adverting to the decisions of the Supreme Court and the Delhi High Court, it would be useful to reproduce the proviso to section 11A of Central Excise Act, 1944, as it stood when the Supreme Court explained "suppression of facts" in Pushpam 12 ST/51858/2021 Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay3. It is as follows:
"11A: Where any duty of excise has not been levied or paid or has been short-levied or short-pain or erroneously refunded, by the reason of-
(a) fraud; or
(b) collusion; or
(c) any wilful misstatement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Act of the rules made thereunder with intent to evade payment of duty by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant dated, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under Section 11AA and a penalty equivalent to the duty specified in the notice."
26. In Pushpam Pharmaceuticals Company, the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since "suppression of facts‟ has been used in the company of strong words such as fraud, collusion, or
3. 1995 (78) E.L.T. 401 (SC) 13 ST/51858/2021 wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. The observations are 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 court 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."
(emphasise supplied)
27. This decision was referred to by the Supreme Court in Anand Nishikawa Company Ltd. vs. Commissioner of Central Excise4 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 :-
4. 2005 (188) E.L.T. 149 (SC) 14 ST/51858/2021 "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, 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 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 proviso to Section 11A of the Act."
(emphasis supplied)
28. These two decisions in Pushpam Pharmaceuticals and Anand Nishikawa Company Ltd. were followed by the Supreme Court in the subsequent decision in Uniworth Textile Limited vs. Commissioner of Central Excise, Raipur5 and the observation are:
"18. We are in complete agreement with the principal enunciated in the above decisions, in light of the proviso to section 11A of the Central Excise Act, 1944."
5. 2013 (288) E.L.T. 161 (SC) 15 ST/51858/2021
29. The Supreme Court in Continental Foundation Joint Venture Holding vs. Commissioner of Central Excise, Chandigarh-I6 also held:
"10. The expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or "collusion" and, therefore, has to be construed strictly. 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 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct."
(emphasis supplied)
30. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication)7 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
6. 2007 (216) E.L.T. 177 (SC)
7. 2018 (12) GSTL 368 (Del.) 16 ST/51858/2021 payment of duty. It connotes a positive act of the assessee to avoid excise duty.
xxxx 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."
xxxx 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 is clear that the Appellant did not have any such intention and was acting under a bonafide belief."
(emphasis supplied)
31. Very recently the Delhi High Court in Mahanagar Telephone Nigam Ltd. vs. Union of India and others8, also observed as follows:
"28. In terms of the proviso to Section 73(1) of the Act, the extended period of limitation is applicable only in cases where service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, or collusion, or wilful misstatement, or suppression of facts, or contravention of any provisions of the Act or the Rules made thereunder with an intent to evade payment of service tax. However, the impugned show cause notice does not contain any allegation of fraud, collusion, or wilful misstatement on the part of MTNL. The impugned show cause notice alleges that the extended period of limitation is applicable as MTNL had suppressed the material facts and had contravened the provisions of the Act with an intent to evade service tax. Thus, the main question to be addressed is whether the allegation that MTNL had suppressed material facts for evading its tax liability, is sustainable.
xxxxxxxxx
8. W.P. (C) 7542 of 2018 decided on 06.04.2023 17 ST/51858/2021
41. In the facts of this case, the impugned show cause notice does not disclose any material that could suggest that MTNL had knowingly and with a deliberate intent to evade the service tax, which it was aware would be leviable, suppressed the fact of receipt of consideration for rendering any taxable service. On the contrary, the statements of the officials of MTNL, relied upon by the respondents, clearly indicate that they were under the belief that the receipt of compensation/financial support from the Government of India was not taxable. Absent any intention to evade tax, which may be evident from any material on record or from the conduct of an assessee, the extended period of limitation under the proviso to Section 73(1) of the Act is not applicable. The facts of the present case indicate that MTNL had made the receipt of compensation public by reflecting it in its final accounts as income. As stated above, merely because MTNL had not declared the receipt of compensation as payment for taxable service does not establish that it had willfully suppressed any material fact. MTNL‟s contention that the receipt is not taxable under the Act is a substantial one. No intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return."
(emphasis supplied)
32. It would transpire from the aforesaid decisions that mere suppression of facts is not enough and there must be a deliberate and wilful attempt on the part of the assessee to evade payment of duty. In the absence of any intention to evade payment of service tax, which intention should be evident from the materials on record or from the conduct of the assessee, the extended period of limitation cannot be invoked. Thus, mere non disclosure of the receipts in the service tax return would not mean that there was an intent to evade payment of service tax.
18 ST/51858/2021
33. This issue was also examined at length by this Bench in M/s G.D. Goenka Private Limited versus The Commissioner of Central Goods and Service Tax, Delhi South9 and after referring to the provisions of section 73 of the Finance Act, the Bench observed:-
"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.
xxxxxxxxxxxxx
14. In this appeal, the case of the Revenue is that the appellant had wilfully and deliberately suppressed the fact that it had availed ineligible CENVAT credit on input services. The position of the appellant was at the time of self-assessment and, during the adjudication proceedings and is before us that it is entitled to the CENVAT credit. Thus, we find that it is a case of difference of opinion between the appellant and the Revenue. The appellant held a different view about the eligibility of CENVAT credit than the Revenue. Naturally, the appellant self-assessed duty and paid service tax as per its view. Such a self- assessment, cannot, by any stretch of imagination, be termed deliberate and wilful suppression of facts.
16. Another ground for invoking extended period of limitation given in the impugned order is that the appellant was operating under self- assessment and hence had an obligation to assess service tax correctly and take only eligible CENVAT credit and if it does not do so, it amounts to suppression of facts with an intent to evade
9. Service Tax Appeal No. 51787 of 2022 dated 21.08.2023 19 ST/51858/2021 and violation of Act or Rules with an intent to evade. We do not find any force in this argument because every assessee operates under self- assessment and is required to self-assess and pay service tax and file returns. If some tax escapes assessment, section 73 provides for a SCN to be issued within the normal period of limitation. This provision will be rendered otiose if alleged incorrect self- assessment itself is held to establish wilful suppression with an intent to evade. To invoke extended period of limitation, one of the five necessary elements must be established and their existence cannot be presumed simply because the assessee is operating under self-assessment."
(emphasis supplied)
34. In the present case, as noticed above, the Commissioner (Appeals) did not even record a finding that the appellant had any intention to evade payment of service tax since all that has been recorded in the impugned order by the Commissioner (Appeals) is that the appellant did not disclose the correct facts in the service tax returns. In the absence of such a finding, which is absolutely necessary, the extended period of limitation could not have been invoked. It is also relevant to mention that there could not have been any intent to evade payment of service tax on input service since it was open to the appellant to take credit while providing output service. The Tribunal in G.D. Goenka had clearly held that self assessment cannot be a ground to invoke the extended period of limitation in the absence of the ingredients contemplated under the proviso to section 73 (1) of the Finance Act. The entire demand confirmed by the Commissioner (Appeals) falls in the extended period of limitation.
20 ST/51858/2021
35. The impugned order dated 25.08.2021 passed by the Commissioner (Appeals), therefore, deserves to be set aside and is set aside. The appeal is, accordingly, allowed.
(Dictated and pronounced in open court.) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) PK/Jyoti