Custom, Excise & Service Tax Tribunal
Sotc Travels Services Pvt Ltd vs Principal Commissioner, Central ... on 20 September, 2021
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH
SERVICE TAX APPEAL No. 50046 of 2016
(Arising out of Order-in-Original No. 33/ST/D-I/2015 dated 30.09.2015 passed by
the Principal Commissioner of Central Excise, New Delhi)
M/s. SOTC Travels Services Pvt. Ltd. ...Appellant
(Formerly known as Kuoni Travel
India Private Limited)
versus
Principal Commissioner of Central ....Respondent
Excise, Delhi-I
APPEARANCE:
Shri B.L. Narasimhan, Ms. Shagun Arora and Shri Kunal Aggarwal, Advocates
for the Appellant
Shri Harsh Vardhan, Authorised Representative for the Department
CORAM:
HON'BLE MR.JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. C.J. MATHEW, MEMBER (TECHNICAL)
Date of Hearing: 27.08.2021
Date of Decision: 20.09.2021
FINAL ORDER NO. 51821/2021
JUSTICE DILIP GUPTA:
M/s. SOTC Travels Service Private Limited1 has filed this appeal
to assail the order dated 30.09.2015 passed by the Principal
Commissioner of Central Excise, New Delhi2, by which the demand of
service tax has been confirmed with interest and penalty.
2. The appellant is engaged in rendering air travel agent and other
tour related services. During the period of dispute from 01.10.2008 to
1. the appellant
2. the Principal Commissioner
2
ST/50046/2016
31.03.2013, the appellant was rendering air travel agent services to
the Embassy of the United States of America3. The appellant claims
that it was the sole and exclusive service provider for the US Embassy
and operated from a desk set up within the premises of the US
Embassy. On such services, the appellant was availing exemption from
payment of service tax in terms of Notification dated 23.05.2007 till
30.06.2012 and, thereafter, under Notification dated 20.06.2012.
These Notifications exempted services rendered to diplomatic mission
or consular posts in India from payment of service tax.
3. In 2014, an investigation was initiated and audit of the records
of the appellant was conducted in terms of rule 5A of the Service Tax
Rules, 19944. During the audit, it was observed that the appellant was
incorrectly availing exemption on services rendered to the US
Embassy.
4. The audit resulted into issuance of a show cause notice dated
16.04.2014 proposing to deny the exemption as a result of which a
demand of service tax amounting to Rs. 81,11,575 was made. The
allegations in the show cause notice are as follows:
"12. Whereas, the party does not appear to be eligible for
exemption under Notification No. 33/2007-ST dated 23.05.2007
and Notification No. 27/2012- ST dated 20.06.2012 as they did
not fulfill the conditions laid down in the notifications. The said
Notifications exempts taxable services so provided by any
person for official use of a foreign diplomatic mission or
consular post in India from whole of the service tax leviable
under section 66 or 66B of the Finance Act, 1994, subject to
fulfilment of certain conditions. Whereas, from scrutiny of the
documents submitted by the said party, it appears that they
failed to fulfil the following conditions in as much as:
(i) The exemption certificates issued by the Ministry of
External Affairs in fovour of the American Embassy were
not authenticated by the embassy;
3. US Embassy
4. 1994 Rules
3
ST/50046/2016
(ii) Undertakings issued by the Embassy for claiming
exemption from service tax to the said party were not in
original; and
(iii) The invoices issued under the provisions contained
in rule 4A of the Service Tax Rules, 1994 by the party to
the American Embassy under exemption from service
tax not contained the serial number and the date of the
undertakings furnished by the said Embassy.
Therefore, it appears that the party has wrongly availed
exemption from service tax in contravention of conditions
contained in Notification No. 33/2007- ST dated 23.05.2006
(upto 30.06.2012) and Notification No. 27/2012-ST dated
20.06.2012 (w.e.f. 01.07.2012)."
5. The appellant filed a reply contesting the allegations leveled in
the show cause notice. Further, by a letter dated 10.07.2015, the
appellant furnished copies of the undertakings issued by the US
Embassy along with copies of tickets and invoices in support of its
claim.
6. However, the Principal Commissioner passed the impugned order
dated 30.09.2015 denying the exemption to the appellant and
confirming the demand of service tax with penalty.
7. The Principal Commissioner framed the following four issues for
consideration:
(a) Whether the exemption contained in the Notification
dated 23.05.2007 upto 30.06.2012 and Notification dated
20.06.2012 w.e.f. 01.07.2012 is available to the appellant for
the services provided by it to the US Embassy despite the non-
fulfillment of the conditions laid down in the said Notifications
and whether, the service tax can be recovered and demanded
from the appellant in the event it is not entitled to the
exemption?
(b) Whether the appellant fulfilled its duty for amending the
changed address in the Registration Certificate as per the
provisions of Act and if not so, whether penalty is leviable?
(c) Whether the extended time period can be invoked?
(d) If yes, whether the appellant is liable for payment of
interest & penalty under the provisions of Act/Rules, as alleged
in the show cause notice?"
4
ST/50046/2016
8. In regard to the issue at (a), the Principal Commissioner found
that the appellant had not mentioned the running serial no's and the
date of undertakings on invoices issued by it. He also found that the
appellant had not struck off the inapplicable portion on the face of the
undertakings and on the undertakings issued by the US Embassy there
was no endorsement of the name of the party. Thus, some of the
mandatory conditions laid down in the Notification were not strictly
followed by the appellant.
9. In regard to the issue at (b), the Principal Commissioner found
that the appellant had not provided documentary proof regarding the
fulfillment of the Service Tax Rules 19945 as the appellant had not got
the addresses amended and kept on doing business from the Noida
address without having any valid registration certificate.
10. In regard to the issue at (c), the Principal Commissioner found
that the appellant had violated the provisions of the Exemption
Notifications knowingly for the purpose of evading service tax and,
therefore, the extended period of limitation contemplated under the
proviso to section 73(1) of the Finance Act was correctly invoked.
11. In regard to the issue at (d), the Principal Commissioner found
that once the service tax liability was confirmed, interest and penal
provisions had to follow.
12. Shri B.L. Narasimhan learned counsel appearing for the appellant
made the following submissions:
(i) The appellant is not liable to pay service tax on the
services rendered to the US Embassy. In this connection it
has been submitted that the appellant has satisfied the
5. 1994 Rules
5
ST/50046/2016
conditions specified in the Exemption Notifications dated
23.05.2007 and 20.06.2017;
(ii) The impugned order has gone beyond the show cause
notice as it has denied exemption for reasons not even
stated in the show cause notice. In this connection reliance
has been placed on the following decisions:
a) Commissioner of Customs, Mumbai vs. Toyo
Engineering India Limited6;
b) Modi-Mundipharma Beauty Products Private
Limited (Formerly Known as Modi Revlon Pvt.
Ltd.) vs. Commissioner of Service Tax, Delhi-
II7; and
c) Commissioner of Service Tax, New Delhi vs.
M/s. TV Today Network Private Limited (Vice-
Versa)8; and
(iii) The extended period of limitation could not have been
invoked in the fact and circumstances of the case;
13. Shri Harsh Vardhan, learned Authorised Representative
appearing for the Department however, supported the impugned order
and contended that the appellant did not satisfy the conditions
contended in the Exemption Notifications. Learned Authorised
Representative also submitted that an Exemption Notification has to be
strictly construed and in support of this submission he placed reliance
upon the decision of the Supreme Court in Uttam Industries vs.
Commissioner of Central Excise, Haryana9 and the decision of the
6. 2006 (201) E.L.T. 513 (S.C.)
7. 2020 (6) TMI 353 -CESTAT, New Delhi
8. 2019 (8) TMI 1688 -CESTAT New Delhi
9. 2011 (265) E.L.T. 14 (S.C.)
6
ST/50046/2016
Jharkhand High Court in Manpreet Engineering & Const. Co. vs.
Union of India10.
14. The submissions advanced by learned counsel for the appellant
and the learned Authorised Representative appearing for the
Department have been considered.
15. The appellant has claimed exemption from payment of service
tax on services rendered to diplomatic mission or consular posts in
India on the basis of the Exemption Notification dated 23.05.2007 for
the period up to 30.06.2012 and for the subsequent period from
01.07.2012 on the basis of the Exemption Notification dated
20.06.2012.
16. The Notification dated 23.05.2007 is reproduced below:
"In exercise of the powers conferred by section 93 of the
Finance Act, 1994 (32 of 1994), the Central Government, being
satisfied that it is necessary in the public interest so to do,
hereby exempts all taxable services specified in section 65 of
the said Act provided by any person, for the official use of a
foreign diplomatic mission or consular post in India, from whole
of the service tax leviable under section 66 of the said Act,
namely:-
1. Procedure:- To claim the exemption the following
procedure shall be fulfilled, namely:-
(i) the foreign diplomatic mission or consular post in India, is
issued with a certificate by the Protocol Division of the
Ministry of External Affairs that it is entitled to exemption
from service tax, as stipulated in the certificate, based on
the principle of reciprocity;
(ii) the head of such foreign diplomatic mission or consular
post, or any person of such mission or post authorized by
him, shall furnish to the provider of taxable service, a copy
of such certificate duly authenticated by him or such
authorized person, alongwith an undertaking in original,
signed by him or such authorized person, bearing running
serial number commencing from a financial year and stating
that the services received are for official purpose of the said
foreign diplomatic mission or consular post;
(iii) the head of such foreign diplomatic mission or consular post
or such authorized person shall maintain an account of such
undertakings issued during a financial year and such
account shall contain:-
(a) the serial number and date of issue of such
undertakings;
10. 2016 (44) S.T.R. 384 (Jhar.)
7
ST/50046/2016
(b) the name and the registration number of the
provider of taxable service; and
(c) the description of taxable service and invoice
number.
(iv) the invoice or bill or as the case may be, the challan issued
under the provision contained in rule 4A of the Service Tax
Rules, 1994 shall, in addition to the information required to
be furnished under the said rule, contain the serial number
and the date of the undertaking furnished by the said head
of foreign diplomatic mission or consular post; and
(v) the provider of taxable service shall retain the documents
referred to in point number (i) above alongwith a duplicate
copy of invoice issued, for the purposes of verification.
2. In case the Protocol Division of the Ministry of External
Affairs, after having issued a certificate to any foreign
diplomatic mission or consular post in India decides to withdraw
it subsequently, it shall communicate the withdrawal of such
certification to the foreign diplomatic mission or consular post.
3. The exemption from the whole of the service tax granted to
the foreign diplomatic mission or consular post in India for
official purpose shall not be available from the date of
withdrawal of such certification given to them."
17. The Notification dated 20.06.2012, which came into force on
01.07.2012, is also reproduced below:
"Exemption to services provided for official use of a
foreign diplomatic mission or consular post in India for
personnel use of diplomatic agents or career consular
officers
In exercise of the powers conferred by section 93 of the
Finance Act, 1994 (32 of 1994), the Central Government, being
satisfied that it is necessary in the public interest so to do,
hereby exempts taxable services provided by any person, for
the official use of a foreign diplomatic mission or consular post
in India, or for personal use or for the use of the family
members of diplomatic agents or career consular officers
posted therein from whole of the service tax leviable under
section 66B of the said Act, subject to the following conditions,
namely :-
(i) that the foreign diplomatic mission or consular post in
India, or diplomatic agents or career consular officers
posted therein, are entitled to exemption from service tax,
as stipulated in the certificate issued by the Protocol
Division of the Ministry of External Affairs, based on the
principle of reciprocity;
(ii) that in case of diplomatic agents or career consular
officers posted in the foreign diplomatic mission or consular
post in India, the Protocol Division of the Ministry of
External Affairs or the Protocol Department of the State
concerned issues to each of such diplomatic agent or career
consular officer an identification card bearing unique
identification number and containing a photograph and
name of such diplomatic agent or
career consular officer and the name of the foreign
diplomatic mission or consular post in India, where he is
posted;
8
ST/50046/2016
(iii) that the head of the foreign diplomatic mission or
consular post, or any person of such mission or post
authorised by him, shall furnish to the provider of taxable
service, a copy of such certificate duly authenticated by him
or the authorised person, alongwith an undertaking in
original, signed by him or the authorised person, bearing
running serial number commencing from a financial year
and stating that the services received are for official
purpose of the said foreign diplomatic mission or consular
post; or for personal use of the said diplomatic agent or
career consular officer or members of his/her family
mentioning the unique identification number as appearing in
the identification card issued to them and stating that the
services received are for personal use of the said diplomatic
agent or career consular officer or members of his/her
family;
(iv) that the head of the foreign diplomatic mission or
consular post or the authorized person shall maintain an
account of the undertakings issued during a financial year
and the account shall contain;-
(a) the serial number and date of issue of the
undertakings;
(b) in case of personal use of diplomatic agents or
career consular officers posted in the foreign diplomatic
mission or consular post in India, the name, designation
and unique identification number of the diplomatic agent
or career consular officer in favour of whom the
undertaking has been issued;
(c) the name and the registration number of the
provider of taxable service; and
(d) the description of taxable service and invoice
number.
(v) The invoice or bill, or as the case may be, the challan
issued under the provisions contained in rule 4A of the
Service Tax Rules, 1994, shall, in addition to the
information required to be furnished under the said rule,
contain the serial number and the date of the undertaking
furnished by the said head of foreign diplomatic mission or
consular post or in case of diplomatic agents or career
consular officers posted in such foreign diplomatic mission
or consular post in India, the unique identification number
of the diplomatic agent or career consular officer, as the
case may be; and
(vi) that the provider of taxable service shall retain the
documents referred to in the conditions (i), (ii) and (iii)
alongwith a duplicate copy of the invoice issued, for the
purposes of verification.
2. In case the Protocol Division of the Ministry of External
Affairs, after having issued a certificate to any foreign
diplomatic mission or consular post in India or as the case may
be, the identification card issued to a diplomatic agent or career
consular officer, decides to withdraw any one or both of them
subsequently, it shall communicate the withdrawal of such
certificate or identification card, as the case may be, to the
foreign diplomatic mission or consular post.
3. The exemption from the whole of the service tax granted to
the foreign diplomatic mission or consular post in India for
official purpose or for the personal use or use of their family
9
ST/50046/2016
members shall not be available from the date of withdrawal of
such certificate or identification card, as the case may be.
4. This notification shall come into force on the 1st day of July,
2012."
18. A bare perusal of the Notification dated 23.05.2007 indicates
that the following conditions have to be satisfied:
i. Services must have been rendered to a diplomatic mission or
consular post in India;
ii. The Protocol Division of the Ministry of External Affairs 11 must
issue a certificate to the specified diplomatic mission or consular
post in India stating that it is entitled to claim exemption from
payment of service tax;
iii. The diplomatic mission or consular office must provide the
taxable service provider an authenticated copy of such
certificate along with an original undertaking (signed and
serially numbered) stating that the services have been received
for official purpose; and
iv. The invoice raised by the service provider must carry the date
and serial number of the undertaking.
19. There is no dispute in the present appeal with regard to the
fulfilment of the first condition.
20. The second condition states that the Protocol Division must
issue a certificate to the diplomatic/consular post in India. In this
regard, the US Embassy was issued certificates from the Protocol
Division and this has not been disputed by the Department.
21. The third condition relates to providing certificates and original
undertakings by the diplomatic mission/ consular post in India to the
service provider. The first two allegations in the show cause notice
are based on the alleged non-fulfilment of this condition. The
11. the Protocol Division
10
ST/50046/2016
conditions required to be fulfilled; allegations in the show cause notice;
submissions made by the appellant; and the findings recorded are
tabulated below:
Condition Allegation in the Submission by the
show cause notice appellant
Diplomatic mission/ US Embassy did not The certificates
consular post must provide authenticated received by the
provide an certificate to the appellant from the US
authenticated copy appellant. Embassy were
of the certificate to authenticated. The
the service provider. certificates carry the
stamp of the US
Embassy. Sample
copies of the
certificates have been
enclosed in the appeal
memo.
Diplomatic mission / US Embassy did not The appellant
consular post must provide original furnished copies of
provide original undertakings to the original certificates
undertakings to the appellant. received from the US
service provider. Embassy before the
These undertakings Department. Copy of
must be serially letter dated
numbered and 10.07.2015 is
signed. enclosed of the appeal
memo. The show
cause notice also
records submission of
original undertakings
in compliance with
summons dated
11.01.2014. Similar
observation has also
given at paragraph 27
of the impugned
order.
22. It would, therefore, be seen that though a submission was
advanced by the appellant in regard to the allegation in the show
cause notice that the US Embassy did not provide authenticated
certificate to the appellant, no finding has been recorded in the
impugned order. It has been pointed out by the appellant that the
certificates received from the US Embassy were duly authenticated as
11
ST/50046/2016
they carried the stamp of the US Embassy. These certificates have also
been enclosed in the appeal memo. It would also be seen that the
impugned order recorded a finding that the format of the undertaking
was not proper. The appellant had furnished copies of the original
undertakings received from the US Embassy. So long as the
undertakings were furnished, it would be immaterial if they were not in
the proper format unless some relevant requirement was not
contained in the undertaking so as to make the undertaking of no
consequence.
23. The fourth condition to the Exemption Notification mentions
that the invoices issued by the service provider must carry the serial
number and date of the undertaking. The purpose of this condition is
to ensure proper correlation between the services rendered and the
exemption claimed by the service provider. The show cause notice has
alleged that the invoices did not carry the serial number of the
undertakings. The exemption was sought to be denied on this ground
and the impugned order has also confirmed such denial.
24. Learned Counsel for the appellant submitted that the appellant
was able to correlate each invoice with the corresponding undertaking.
This is for the reason that the passenger name and the ticket number
given on the invoice has also been mentioned on the corresponding
undertaking. In this connection reference has been made to a
particular invoice corresponding to the certificate and the undertaking
and it is as follows:
12
ST/50046/2016
i Copy of certificate for the year 2007 - (Page 109 of the
appeal memo)
ii. Copy of undertaking issued for travel by air in business
class for Mr. Peter Ballinger carrying the ticket number 217-
9422-900585- (Page 114 of the appeal memo)
iii. Copy of the invoice for ticket number 217-9422-900585
issued for Mr. Peter Ballinger- (Page 115 of the appeal
memo).
25. It has, therefore, been submitted from the entire chain of the
aforesaid documents that there is no room to doubt that the services
were rendered by the appellant to the US Embassy and such services
were exempted by virtue of the undertaking and certificate provided
by the US Embassy to the appellant.
26. This submission of learned counsel for the appellant deserves to
be accepted as a perusal of the aforesaid documents does substantiate
the stand of the appellant.
27. Further, the Exemption Notifications was issued by the Central
Government of India in the public interest to exempt taxable services
provided to a foreign diplomatic mission or consular post in India. As is
evident from clause (i) of both the Notifications, the underlying
purpose is to uphold the principle of reciprocity amongst the nations. It
is only to ensure that there is no evasion of tax and that services have
been rendered specifically to those diplomatic missions/ consular
officers to whom a certificate has been issued by the Protocol Officer
that the Notifications require a correlation to be established between
the invoices and the undertakings. Once these two documents can be
correlated, though not in a manner provided for, the substantive
conditions to the Exemption Notifications stand fulfilled and the
exemption cannot be denied.
13
ST/50046/2016
28. In this connection reliance can be made to the decision of the
Supreme Court in Lakshmiratan Engineering Works Ltd. vs.
Assistant Commissioner (Judicial) l Sales Tax, Kanpur Range,
Kanpur and Another12. The proviso to section 9 of the UP Sales Tax
Act provided that no appeal against an assessment shall be
entertained unless accompanied by satisfactory proof of payment of
the amount of tax admitted by the appellant to be due. The
corresponding rule 66(2) of the UP Sales Tax Rules provided that the
memorandum of appeal shall be accompanied by a challan showing
deposit in the treasury of the admitted tax. It was contented before
the Supreme Court that rule 66(2) provided the 'challan' to be the
mode of proving that the admitted tax was deposited. However,
section 9 of the UP Sales Tax Act was more general and the proviso
thereunder required only satisfactory proof. Hence, it was not open to
a rule to make the section narrower by prescribing a particular mode.
In this connection, the Supreme Court observed:
"The rule lays down one uncontestable mode of proof
which the court will always accept but it does not
exclude the operation of the proviso when equally
satisfactory proof is made available to the officer hearing
the appeal and it is proved to his satisfaction that the
payment of the tax has been duly made and in time. In
this sense, the rule can be regarded as directory since it lays
down one of those modes which will be unquestioned for its
validity. The other modes of proof are not necessarily shut out.
It is to be remembered that all rules of procedure are intended
to advance justice and not to defeat it."
(emphasis supplied)
29. Reliance can also be made to the judgment of the Allahabad
High Court in J.K. Manufacturers Ltd. vs. The Sales Tax Officer,
12. 1967 (9) TMI 116-Supreme Court.
14
ST/50046/2016
Sector ll, Kanpur and Others13. The Sales Tax Officer refused
exemption to sales of yarn on the ground that the petitioner-assessee
had not submitted certificates in Form III-A showing that the goods
were sold to a dealer for resale in the same condition. While deciding
whether a certificate in Form IIIA would be the only proof of sale to a
dealer for resale, the Allahabad High Court held that rule 12-A must be
construed to mean to provide merely a convenient mode of proving
that the purchase of the goods was for resale in the same condition. It
was observed that this rule did not lay down that the only mode of
proving this was by furnishing certificates in Form III-A. The certificate
in Form III-A was one mode by which the dealer could establish that
he had not sold the goods to the consumer, but this was not the only
mode.
30. The view of the Allahabad High Court was affirmed by the
Supreme Court in Chunni Lal Parshadi Lal vs. Commissioner of
Sales Tax, UP., Lucknow14, wherein it was held that the furnishing
of a particular certificate in a prescribed manner cannot be treated as
the only method for a registered dealer to prove otherwise.
31. In the present case, as noticed above, the appellant was able to
correlate the invoices with the undertakings. It can, therefore, be
concluded that the appellant satisfied the substantial conditions set out
in the Exemption Notifications.
32. It needs to be noted that even for the subsequent period, the
appellant continued to provide such services to the US Embassy and
the exemption has been allowed.
13. 1969 (5) TMI 54- Allahabad High Court
14. 1986 (3) TMI 297- Supreme Court
15
ST/50046/2016
33. Learned counsel for the appellant also contented that the
extended period of limitation could not have been invoked in the facts
and circumstances of the present case as there is no mala fide on the
part of the appellant. The learned counsel for the appellant submitted
that the appellant was the only service provider to the US Embassy for
air travel services and the services rendered by it were supported by
certificate and undertakings. Learned counsel also submitted that
details about availing the benefit under the Exemption Notification was
duly declared in the ST-3 returns and this fact has been admitted by
the Department at paragraph 16 of the show cause notice. The
submission, therefore, is that since the ST-3 returns were filed with
the Department, it was aware of the fact that the appellant was
claiming benefit under the Exemption Notifications and so no element
of suppression or mala fide can be attributed to the appellant in such
circumstances. In this connection reliance has been placed on the
following decisions:
a) Delhi International Airport Limited vs. Commissioner of
CGST, Delhi 2019 (24) GSTL 403 (Tri.- Del.);
b) Onward E-Services Ltd. vs. Commissioner Of Service Tax,
Mumbai-Ii 2019 (21) G.S.T.L. 167 (Tri. - Mumbai); and
c) Bharat Hotels Limited vs. Commissioner, Central Excise
(Adjudication) 2018 (2) TMI 123- Delhi High Court.
34. The period of dispute in the present appeal is from 01.10.2008
to 31.03.2013. The show cause notice was issued on 16.04.2014.
35. The submissions advanced by the learned counsel for the
appellant deserves to be accepted. The appellant had in the ST-3
returns clearly mentioned about availing the benefit of the Exemption
Notifications. The Department cannot, therefore, contend that the
16
ST/50046/2016
appellant had suppressed any fact, much less with an intent to evade
payment of service tax.
36. The Supreme Court and the Delhi High Court have held that
suppression of facts has to be "wilful‟ with an intent to evade payment
of service tax.
37. In Pushpam Pharmaceuticals Co. vs. Commissioner of
Central Excise, Bombay15, 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 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‟ had been used in the company of strong
words such as fraud, collusion, or wilful default, suppression of facts
must be deliberate and with an intent to escape payment of duty.
38. The Supreme Court in Continental Foundation Joint Venture
Holding vs. Commissioner of Central Excise, Chandigarh-I16
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
15. 1995 (78) E.L.T. 401 (SC)
16. 2007 (216) E.L.T. 177 (SC)
17
ST/50046/2016
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."
39. The Delhi High Court in Bharat Hotels Limited vs.
Commissioner of Central Excise (Adjudication)17 also examined
at length the issue relating to the extended period of limitation under
the proviso to section 73 (1) of the Act and held as follows;
"27. Therefore, it is evident that failure to pay tax is not a
justification for imposition of penalty. Also, the word
„suppression‟ in the proviso to Section 11A(1) of the Excise Act
has to be read in the context of other words in the proviso, i.e.
"fraud, collusion, wilful misstatement". As explained in Uniworth
(supra), "misstatement or suppression of facts" does not mean
any omission. It must be deliberate. In other words, there must
be deliberate suppression of information for the purpose of
evading of payment of duty. It connotes a positive act of the
assessee to avoid excise duty.
xxxxxxx
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."
xxxxxxx
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."
40. In Delhi International Airport, the Tribunal held as follows:
"Second issue on which the appellant has asserted is that
extended period of limitation cannot be invoked in the present
case and the demand, if any, is time-barred. We find that
there is nothing brought out on record that the appellant
had any intent to evade payment of Service Tax on the
consideration paid by the developers for renting, as
alleged. In fact the appellant had paid Service Tax on the
consideration being licence fees. There appears no suppression
as everything was revealed and was available on balance sheet
submitted to the Department during Audit conducted from July,
2012 to 2013 and also the same were reflected in ST-3 returns.
It is clear that the appellant nurtured a bona fide belief and it
involves interpretation. The Department was also not clear on
the matter, as is clear from various correspondences discussed
in the preceding paras. Reliance in this regard is placed on :
17. 2018 (12) GSTL 368 (Del.)
18
ST/50046/2016
2016 (42) S.T.R. 634 (Cal.): in the matter of Simplex
Infrastructure Ltd. v. Commissioner Service Tax, Kolkata -
Extended period not applicable-when assessee is diligent in
responding to all notices issued by the Department explaining
nature and scope of their business with supporting documents -
There was full and sufficient disclosure of nature of assessee's
business - There was no suppression of material facts to
keep Department in dark with deliberate intent to evade
payment of Service tax - Section 73 of Finance Act, 1994 not
invocable. It is settled law that the element of 'intent to evade'
is inbuilt in the expression 'suppression' - Reliance in this
regard is also placed on 2006 (4) S.T.R. 583 (Tri.-Bang.) in the
matter of Elite Detective Pvt. Ltd. v. Commissioner, and
Religare Securities Ltd. v. CST, Delhi as reported in 2014 (36)
S.T.R. 937 (Tri.-Del.): wherein it was held that the suppression
of fact has to be 'with intent to evade'."
41. It is, therefore, clear that even when an assessee has
suppressed facts, the extended period of limitation can be invoked
only when "suppression‟ or "collusion" is wilful with an intent to evade
payment of duty. The invocation of the extended period of limitation,
therefore, cannot be sustained.
42. In such circumstances it would not be necessary to examine the
contention advanced by learned counsel for the appellant that
impugned order has gone beyond the allegations made in the show
cause notice.
43. Thus, for all the reasons stated above, the impugned order dated
30.09.2015 passed by the Principal Commissioner cannot be sustained
and is set aside. The appeal is, accordingly, allowed.
(Pronounced in open Court on 20.09.2021)
(JUSTICE DILIP GUPTA)
PRESIDENT
(C.J. MATHEW)
MEMBER (TECHNICAL)
JB,Shreya
19
ST/50046/2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH
SERVICE TAX APPEAL No. 50046 of 2016
(Arising out of Order-in-Original No. 33/ST/D-I/2015 dated 30.09.2015 passed by
the Principal Commissioner of Central Excise, New Delhi)
M/s. SOTC Travels Services Pvt. Ltd. ...Appellant
(Formerly known as Kuoni Travel
India Private Limited)
versus
Principal Commissioner of Central ....Respondent
Excise, Delhi-I
APPEARANCE:
Shri B.L. Narasimhan, Ms. Shagun Arora and Shri Kunal Aggarwal, Advocates
for the Appellant
Shri Harsh Vardhan, Authorised Representative for the Department
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
Date of Hearing: 27.08.2021
Date of Decision: 20.09.2021
ORDER
Order pronounced.
(JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) JB