Custom, Excise & Service Tax Tribunal
U P Electronic Corporation Ltd vs Ce & Cgst Lucknow on 13 November, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.II
Service Tax Appeal No.51760 of 2015
(Arising out of Order-in-Original No. 22-COMMR-LKO-ST-2014-15, dated -
07/11/2014 passed by Commissioner, Central Excise & Service Tax, Lucknow)
U P Electronics Corporation Ltd, .....Appellant
(10 Ashok Marg, Lucknow, Uttar Pradesh 226001)
VERSUS
Commissioner, Central Excise & Service Tax, Lucknow
....Respondent
(7A, Ashok Marg, Lucknow)
AND
Service Tax Appeal No.50703 of 2015
(Arising out of Order-in-Original No. 22-COMMR-LKO-ST-2014-15, dated -
07/11/2014 passed by Commissioner, Central Excise & Service Tax, Lucknow)
Commissioner, Central Excise & Service Tax, Lucknow
.....Appellant
(7A, Ashok Marg, Lucknow)
VERSUS
U P Electronics Corporation Ltd, ....Respondent
(10 Ashok Marg, Lucknow, Uttar Pradesh 226001)
APPEARANCE:
Shri Shiv Kumar Yadav, Clerk for the Assessee
Ms. Chitra Srivastava, Authorised Representative for the Revenue
CORAM: HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
HON'BLE MR. ANGAD PRASAD, MEMBER (JUDICIAL)
FINAL ORDER NO.70791-70792/2025
DATE OF HEARING : 15.07.2025
DATE OF DECISION : 13.11.2025
2 Service Tax Appeal No.51760 &
50703 of 2015
SANJIV SRIVASTAVA:
These appeals are directed against the Order-in-Original
No. 22-COMMR-LKO-ST-2014-15, dated -07/11/2014 passed by
Commissioner, Central Excise & Service Tax, Lucknow. By the
impugned order following has been held:-
ORDER
"I confirm the demand of Rs. 1,86,12,697/- (Rupees one crore eighty six lakh twelve thousand six hundred ninety seven only) on M/s. U. P. Electronics Corporation Ltd. under S.73(1) of the Finance Act 1994 along with interest leviable under S 75 of the Act.
I waive all the penalties proposed in the show cause notice under section 80 of the Finance Act, 1994"
2.1 The Appellant is a state government undertaking and are engaged in providing 'Management, Maintenance or Repair Services' in terms of Section 65(64) read with 65(105)(zzg), which are chargeable to Service Tax under Finance Act, 1994 and are registered with the Department.
2.2 During the course of scrutiny of records of the Appellant's it was observed that they were also providing following services for which they had neither obtained registration nor complied with any other provision of law:-
(i) Commercial Coaching and Training Service in terms of Section 65(26) read with Section 65(105)(zzc) of the Finance Act, 1994.
(ii) Online Information Retrieval Service in terms of Section 65(75) read with 65(105)(zh) of the Finance Act, 1994.
(iii) Event Management Service in terms of Section 65(40) read with Section 65(105)(zu) of the Finance Act, 1994.
(iv) Business Auxiliary Service in terms of Section 65(19) read with Section 65 (105)(zzb) of the Finance Act, 1994.
3 Service Tax Appeal No.51760 & 50703 of 2015
(v) Franchise service in terms of Section 65(47) read with Section 65(105)(zze) of the Finance Act, 1994 (hereinafter referred to as 'the Act').
2.3 On each of the service it was observed that the Appellant had short paid Service Tax as detailed in tables below:-
(i) Commercial Coaching and Training Service Year Service Computer Corporate Total Service tax Tax @ Education Fees Computer Training amount due (%) Fee received 2006-07 12.24 3532050 21276809 24808859 3036604 2007-08 12.36 3351831 17672725 21024556 2598635 2008-09 12.36 2034179 21594529 23628708 2920508 till 23.02.09 From 10.3 184925 1963139 2148064 221250 24.02.09 2009-10 10.3 908788 17751870 18660658 1922048 Total 10699045
(ii) Online Information Retrieval Service Year Service E-Tender Website Networking/ Total amount Service tax Tax @ customizati development electrical charges/ received due (%) on fees charges peripheral receipt received 2006-07 12.24 - 893500 7417268 8310768 1017238 2007-08 12.36 74930 4137250 19907172 24119352 2981152 2008-09 12.36 3667649 128333 12344242 16140224 1994932 till 23.02.09 From 10.3 333423 11667 1122204 1467294 151131 24.02.09 2009-10 10.30 11529750 988458 15392229 27910437 2874774 Total 90,19,227
(iii) Event Management Service Year Rate of service tax Total amount received Service tax due 2006-07 12.24% 49,75,919 6,09,052
(iv) Business Auxiliary Service (Job charges shown in Balance Sheet) Year Rate of Service Tax Total amount received Service Tax due 2007-08 12.36 1198400 148122 2008-09 10.30 10700 1102 Total 1,49,224
(v) Franchise service Year Rate of Service Tax Total amount received Service Tax due 2006-07 12.24 765000 93636 2007-08 12.36 620000 76632 2008-09 till 12.36 1237500 152955 23.02.09 4 Service Tax Appeal No.51760 & 50703 of 2015 From 10.3 112500 11588 24.02.09 Total 3,34,811/-
2.4 Thus Appellant during the period from 2006-07 to 2009-10 short paid Service Tax as detailed in the table below:-
Year Rate of service tax Total amount received S.Tax due 2006-07 12.24 38860546 4756531 2007-08 12.36 46962308 5804541 2008-09 12.36 41006432 5068395 upto 23.02.09 From 10.3 3738558 385071 24.02.09 2009-10 10.3% 46571095 4796822 Total 177138959 2,08,11,360 2.5 Alleging the Appellant who were required to self-assess the Service Tax liability and by showing incorrect value of taxable value in ST-3 Returns and failed to deposit correct Service Tax have thus willfully suppressed material information with intent to evade payment of Service Tax.
2.6 Show Cause Notice dated 13.10.2011 was issued to the Appellant asking them to show cause as to why:-
1) Service Tax total amounting to Rs. 2,08,11,3601- (Two Crore Eight Lacs Eleven Thousand Three Hundred Sixty Only) not paid by them should not be demanded and recovered from them under the proviso to the Section 73 (1) of the Finance Act, 1994.
2) Interest at appropriate rate should not be charged and recovered from them under Section 75 of Finance Act, 1994 for non-payment of service tax by due dates.
3) Penalty should not be imposed upon them under Section 76 of the Finance Act, 1994 for non-payment of service tax on consideration received for providing services.
4) Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994 for the reason of suppressing the material fact and willful mis-statement i.e. not showing the correct value of taxable services in their ST-
3 returns, with intent to evade payment of service tax.
5 Service Tax Appeal No.51760 & 50703 of 2015 2.7 The Show Cause Notice has been adjudicated as per the impugned order referred in Para 1 above.
2.8 Aggrieved by the impugned order Appellant and Revenue both have filed these appeals.
3.1 This matter has been listed for hearing on number of times i.e. 18.03.2024, 24.06.2024, 29.07.2024, 18.09.2024, 13.11.2024, 09.12.2024, 05.03.2025 & 15.07.2025. When the matter was listed on 15.07.2025, none appeared for the Appellant. Shri Shiv Kumar Yadav, Clerk for the Counsel appeared and requested for an adjournment. Since the matter has been adjourned for more than the maximum prescribed number of times as per proviso to Section 35C (1A) of the Central Excise Act, 1944 matter has been taken up for consideration after hearing the Revenue. On 15.07.2025 following order was passed:-
"ORDER SHEET When the matter was called, Shri Shiv Kumar Yadav, Clerk of the counsel for the Respondent appeared on behalf the counsel and requested for an adjournment.
2. Since the issue is in very narrow compass and matter has been adjourned more than 3 times and on the last occasion matter was adjourned by way of last chance, we are deciding the issue on merits.
3. Heard learned Authorized Representative for the Revenue and perused the appeal records.
4. Order Reserved. Both sides are at liberty to file written submission."
3.2 Written submissions have been filed by Shri Sanjay Kumar, Advocate on 25.08.2025 3.3 Heard learned Authorized Representative for the Revenue who reiterates the findings recorded in the impugned order and also the grounds taken in the appeal filed by the Revenue.
6 Service Tax Appeal No.51760 & 50703 of 2015 4.1 We have considered the impugned order alongwith the submissions made in the appeal and during the course of argument.
4.2 We find that demand in the present case has been made by invoking the extended period of limitation. The impugned order records as follows for invocation of extended period of limitation:
"The assessee has raised the plea of SCN being non speaking and unfounded with reason, extended period not invocable to raise demand and impose penalty non observance of provisions of S 67(2) of the Act to treat the value of tax demand as cum tax value, Proposal to impose penalty u/s 76 and 78 both simultaneously to assail the notice. The assessee has also taken plea that being a government company there could not be a mala fide intention to evade tax on their part and sought waiver of penalty under S 80 of the Act.
I have considered the submission of the assessee and case law relied by them. I find that the SCN is precise and unambiguous to propose demand of tax and imposition of penalty. The SCN sustains.
It is because of the audit and its follow up by the Superintendent vide letters dated 17.6.11 and 05.07.11 that the evasion of tax was detected. The assessee has failed to disclose the taxable value and activity in their ST3 returns. There is suppression of fact on their part and extended period has rightly been invoked to demand service tax.
The assessee also submits that the Department has treated the gross amount received by the assessee as the value of texable service, without making any adjustments for service tax included in it. The manner of computation of tax adopted by the Department is incorrect. Therefore, gross amount received by the assessee is to be considered as cum-tax and demand should be calculated accordingly. I 7 Service Tax Appeal No.51760 & 50703 of 2015 find that principle contained in S 67(2) of the Act has not been followed while quantifying the demand in the show cause notice. There is no evidence in the notice that the assessee had collected tax or any other amount separately. Keeping in view the provision contained in S 67(2) of the Act and case laws relied by the assessee the demand of tax is re quantified as under-
Year Rate of Taxable Services Total Taxable S.Tax due
Service amount value as
Tax received per S
CTC OIS EVS BAS FRA 67(2)
06-07 12.24 24808859 8310768 4975919 0 765000 38860546 34622725 4237821
07-08 12.36 21024556 24119352 0 1198400 620000 46962308 41796287 5166021
2008-09
upto 12.36 23628708 16140224 0 0 1237500 41006432 36495578 4510854
23.02.09
From
10.3 2148064 146729 4 0 10700 112500 3738558 3389445 349113
24.02.09
09-10 10.3 18660658 27910437 0 0 0 46571095 42222208 4348888
Total 177138959 1,86,12,697
I am inclined to appreciate the fact that the assessee is a UP Government undertaking and transaction on which the tax demand sustained was captured in the books of account. I find reasonable ground to wave penalty u/s 80 of the Act. I refrain from imposing penalty U/s 76 and 78."
4.3 It is also not in dispute that the appellant was regularly filing the ST-3 return as prescribed, and were discharging their service tax liability as assessed by them on their basis of their bonafide beliefs and understanding of the law. The dates of filing of the return during the period of dispute as indicated in the table below:
Period Due Date Date of Filling From To 01.04.2006 30.09.2006 25.10.2006 18.10.2006 01.10.2006 31.03.2007 25.04.2007 17.04.2007 01.04.2007 30.09.2007 25.10.2007 10.10.2007 01.10.2007 31.03.2008 25.04.2008 22.04.2008 01.04.2008 30.09.2008 25.10.2008 23.10.2008 8 Service Tax Appeal No.51760 & 50703 of 2015 01.10.2008 31.03.2009 25.04.2009 20.04.2009 01.04.2009 30.09.2009 25.10.2009 22.10.2009 01.10.2009 31.03.2010 25.04.2010 23.04.2010 Thus the show cause notice without invoking the extended period of limitation could have been issued in the present case within one year from the date of filing the ST-3 return. We find that as the show cause notice has been issued on 13.10.2011 the same has been issued beyond normal period of limitation as provided by the Section 73 of the Finance Act, 1994.
4.4 We do not find any reason being recorded to show that the Appellant had willfully suppressed or mis-declared with regards to the taxable services provided by them with intent to evade payment of taxes. It is also evident that taking note of the fact that the Appellant is a Uttar Pradesh Government undertaking and transaction on which tax demand was being upheld was captured in the books of accounts for waving off the penalties to be imposed under Section 80 of the Finance Act, 1994.
4.5 If all the transactions were recorded as observed in the books of accounts of the Appellant there could have been no ground for invoking extended period of limitation. Secondly mere failure to disclose certain information could not have been the reason for invoking the extended period. In case of Uniworth Textiles Ltd. V/s Commissioner of Central Excise, Raipur reported at 2013 (288) E.L.T. 161 (S.C.) the Hon'ble Supreme Court has held as under:-
"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 9 Service Tax Appeal No.51760 & 50703 of 2015 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 :
"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 10 Service Tax Appeal No.51760 & 50703 of 2015 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 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 11 Service Tax Appeal No.51760 & 50703 of 2015 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 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 12 Service Tax Appeal No.51760 & 50703 of 2015 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 13 Service Tax Appeal No.51760 & 50703 of 2015 understand how the non-payment of duty on disclosed items, after inquiry from the concerned department meets, with that fate.
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 14 Service Tax Appeal No.51760 & 50703 of 2015 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 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 15 Service Tax Appeal No.51760 & 50703 of 2015 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 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.
16 Service Tax Appeal No.51760 & 50703 of 2015
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 :-
"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 17 Service Tax Appeal No.51760 & 50703 of 2015 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."
18 Service Tax Appeal No.51760 & 50703 of 2015 4.6 Revenue in their appeal has challenged dropping of the penalties that could have been imposed on the Appellant by invoking provisions of Section 80. We do not find any merits in the said ground for the basic reason that the Appellant is a State Government undertaking and the findings of the Commissioner that all the transactions were recorded in the books of accounts of the Appellant has not been challenged.
4.7 On merits of taxation of the services the Appellants have in their written submissions relied upon the following decisions:-
(i) Computer Kids [2025 (8) TMI 11] (ii) ITM International Pvt. Ltd. [ST/825-960/2010, Final
Order No.56696-56697/2017 dated 11.09.2017]
(iii) Tandem Integrated Services [2019 (3) TMI 1440 -
Kerala High Court]
(iv) Balaji Enterprises [2020 (33) G.S.T.L. 97 (Tri.-Del.) 4.8 In view of the discussions as above, we do not find any merits in the impugned order to the extent it confirms demand by invoking extended period of limitation.
4.9 We do not find any merits in the appeal filed by the Revenue against invocation of Section 80 in waving of the penalties that were to be imposed under terms of Section 76 & 78 of the Act.
5.1 Appeal filed by the Appellant is allowed.
5.2 Appeal filed by the Revenue is dismissed.
(Pronounced in open court on 13.11.2025) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) Sd/-
(ANGAD PRASAD) MEMBER (JUDICIAL) Nihal