Custom, Excise & Service Tax Tribunal
Omaxe For Est Spa &Amp; Hills Developers ... vs Delhi East on 27 November, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. I
SERVICE TAX APPEAL NO. 50383 OF 2018
(Arising out of Order-in-Appeal No. 74/ST/DLH/2017 dated 06.11.2017 passed by the
Commissioner (Appeals-I), CGST and Central Excise, Delhi)
M/s. Omaxe for EST Spa & .....Appellant
Hills Developers Limited
10, Local Shopping Centre,
Kalkaji, New Delhi-110019
VERSUS
Commissioner, CGST, .....Respondent
Delhi East, New Delhi
CR Building, I.P. Estate,
New Delhi-110002
APPEARANCE:
Shri Monish Panda and Shri Anmol Jasal, Advocates for the Appellant
Shri Manoj Kumar, Authorized Representative for the Department
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
DATE OF HEARING: 28.05.2025
DATE OF DECISION: 27.11.2025
FINAL ORDER NO. 51802/2025
JUSTICE DILIP GUPTA:
This appeal has been filed by M/s. Omaxe for EST Spa & Hill
Developers Limited 1 for quashing the order dated 06.11.2017 passed by the
Commissioner (Appeals-I), CGST and Central Excise, Delhi 2 by which the
appeal filed by the appellant against the order dated 17.03.2017 passed by
the Additional Commissioner, Service Tax, Delhi-II 3 has been dismissed and
the order of the Additional Commissioner has been upheld.
1. the appellant
2. the Commissioner (Appeals)
3. the Additional Commissioner
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ST/50383/2018
2. The appellant is engaged in the business of construction related
activities. As a developer of residential properties, the appellant launches
projects for development of residential complex for sale at the pre-
construction stage itself and invites applications for allotment from
interested parties. The interested parties make their applications for
allotment with earnest money. After receipt of applications, the appellant
processes the same and issues allotment letters to successful prospective
buyers. The earnest money of unsuccessful buyers is refunded. The
appellant executes a buyer agreement with the successful allottee. According
to the appellant, the said buyer agreement executed by the appellant is only
an agreement to sell in future and does not convey any title in property to
the buyer and such title is conveyed only when the conveyance deed is
entered into after completion of construction. In terms of the buyer
agreement, the appellant recovers various charges from the buyer, which
have been broadly divided into:
(a) Basic Sale Price;
(b) Preferential Location Charges; and
(c) Other charges including car parking charges
3. On the amount received towards basic sale price, the appellant
discharged service tax under the category of "construction of complex
services" made taxable under section 65(105)(zzzh) of the Finance Act,
1994 4.
4. The appellant claims that in respect of the amount received towards
car parking charges, which are separately identified in the agreement itself,
the appellant had not paid any service tax as the same was excluded from
the scope of service tax. The appellant further claims that such exclusion
4. the Finance Act
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ST/50383/2018
was removed with the introduction of negative list from July, 2012 and so
the appellant stated paying service tax on car parking charges from July,
2012. It is for this reason that the demand in the instant appeal is limited to
the period from July, 2010 to June, 2012.
5. The audit of the appellant was carried out for the period from 2007 to
2012 and it was pointed out that the car parking charges received by the
appellant are chargeable to service tax under the category of "construction
of complex services" under section 65(105)(zzzh) of the Finance Act.
6. Subsequently, a show cause notice dated 18.03.2014 was issued to
the appellant proposing demand of service tax of Rs. 34,36,374/- on car
parking charges under the category of "construction of complex services", by
invoking the extended period of limitation.
7. The appellant filed a reply to the show cause notice and denied the
allegations. The appellant also stated that the extended period of limitation
could not have been invoked in the facts and circumstances of the case.
8. The adjudicating authority confirmed the demand proposed under the
show cause notice and upheld the invocation of the extended period of
limitation. However, the liability was recomputed to Rs. 31,00,813/-. The
adjudicating authority also imposed an equivalent amount of penalty of Rs.
31,00,813/- under section 78 of the Finance Act and Rs. 10,000/- under
section 77 of the Finance Act.
9. The appellant preferred an appeal before the Commissioner (Appeals)
which appeal was dismissed.
10. It is against this order of the Commissioner (Appeals) that the present
appeal has been filed.
11. Apart from making submissions on merit that the appellant was not
liable to pay service tax on car parking charges, Shri Monish Panda, learned
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counsel for the appellant assisted by Shri Anmol Jasal submitted that the
extended period of limitation could not have been invoked in the facts and
circumstance of the case.
12. Shri Manoj Kumar, learned authorized representative appearing for the
department, however, submitted that the extended period of limitation was
correctly invoked.
13. The submissions advanced by the learned counsel for the appellant
and the learned authorized representative appearing for the department
have been considered.
14. To appreciate this submission, it would be pertinent to refer to the
relevant portion of the show cause notice dealing with the aspect of
invocation of the extended period of limitation. It is reproduced below:
"3. From the foregoing it appears that M/s.
Omaxe Build Home Private Limited, 12, Local
Shopping Centre, Kalkaji, New Delhi 110019, has
contravened the following provisions of Chapter V
of the Finance Act, 1994, as amended and the
provisions of Service Tax Rules, 1994, as
amended that the assessee failed to do self
assessment of service tax on services provided by
him, quantify and pay to the Government
exchequer and filed proper and correct ST-3
returns in good faith in the following
manner:*****
4. Whereas, it further appears that the assessee
by doing so, has intentionally and willfully
suppressed the facts of providing impugned
taxable services and collection of impugned value of
such taxable services and did not pay the Service Tax
as applicable on such services on the taxable value and
did not file prescribed ST-3 returns accordingly. Thus,
by not disclosing the entire facts to the Department,
the said value has escaped the assessment for Service
Tax liability, resulting into contravention of various
provisions of the said Act and the said Rules aforesaid
with the intention to evade payment of impugned
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ST/50383/2018
Service Tax. But for this audit the said value which
has escaped leviability of Service Tax would not
have come to the notice of the department. Thus,
it appears that the proviso to Section 73(1) of the Act
ibid and can be invoked and thus, demand and
recovery can be made for non-levy and non-payment of
Service Tax for five years from the relevant date."
(emphasis supplied)
15. The impugned order records the following findings:
"15. The case was detected on audit of Appellants'
records. Had the audit not been carried out, loss
to exchequer would not have been unearthed. The
onus on Appellants to pay correct taxes in self
assessment scheme has clearly not been
discharged & Appellants have not explained the
intent to evade tax if they clearly believed that
charges for parking were not taxable. It can't be
any thing other than intention to evade. There was no
information provided to department on various charges
received & the information on parking charges was
definitely suppressed from the department. Therefore,
invocation of extended period for demand and
imposition of penalty under Section 78 is justified. AA
has also justifiably explained imposition of penalty
under Section 77. Therefore, there is no reason to
interfere with the findings in the impugned orders on
these issues."
(emphasis supplied)
16. Learned counsel for the appellant submitted that the appellant
bonafide believed that no service tax was payable on parking charges and
that the issue involved was purely interpretational and legal in nature
relating to taxability of construction complex services, which service was
introduced only in 2010. It cannot, therefore, be alleged that there was any
intention on the part of the appellant to evade payment of tax. Learned
counsel pointed out that the appellant had been maintaining proper records
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of the service tax paid and had also been filing the returns regularly which
returns contained all the details relating to the services rendered and taxes
paid by the appellant. Learned counsel, therefore, submitted that the
extended period could not have been invoked to confirm demand and
impose penalty.
17. In order to appreciate the contentions that have been advanced
relating to invocation of the extended period of limitation, it would be
appropriate to refer to section 73 of the Finance Act, as it stood prior 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. The period
involved in this appeal is from July, 2010 to June, 2012. Section 73 of the
Finance Act, as it stood prior to 28.05.2012, is reproduced below:
"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 six months from the relevant date, serve notice
on 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
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effect, as if, for the words "six months", the words "five
years" had been substituted."
18. With effect from 28.05.2012 upto 14.05.2016, the period of "six
months" mentions in sub-section (1) section 73 of the Finance Act was
substituted by "one year".
19. 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 "six
months" or "one year", the word "five years" has been substituted.
20. The Supreme Court in Pushpam Pharmaceutical Co. vs.
Commissioner of Central Excise, Bombay 5, in the context of section 11A
of the Central Excise Act, 1944, which is identical to section 73(1) of the
Finance Act, 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 Central 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 wilful default, suppression of facts must be deliberate
5. 1995 (78) E.L.T. 401 (SC)
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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."
(emphasis supplied)
21. This decision was relied upon by the Supreme Court in Anand
Nishikawa Company Ltd. vs. Commissioner of Central Excise 6 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
6. 2005 (188) E.L.T. 149 (SC)
9
ST/50383/2018
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 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)
22. In Easland Combines, Coimbatore vs. Collector of Central
Excise, Coimbatore 7 the Supreme Court observed that for invoking the
extended period of limitation, duty should not have been paid because of
fraud, collusion, wilful statement, suppression of fact or contravention of any
provision. These ingredients postulate a positive act and, therefore, mere
failure to pay duty which is not due to fraud, collusion or wilful misstatement
or suppression of facts is not sufficient to attract the extended period of
7. (2003) 3 SCC 410
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ST/50383/2018
limitation.
23. The aforesaid decisions of the Supreme Court were relied upon by the
Supreme Court in Uniworth Textiles Ltd. vs. Commissioner of Central
Excise, Raipur 8 and the relevant portion of the judgment is reproduced
below:
"12. We have heard both sides, Mr. R.P. Batt, 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 nonpayment would
amount to ordinary default? Construing mere non-
payment as any of the three categories contemplated
by the proviso would leave no situation for which, a
limitation period of six months may apply. In our
opinion, the main body of the Section, in fact,
contemplates ordinary default in payment of
duties and leaves cases of collusion or wilful
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."
(emphasis supplied)
24. The Supreme Court in Continental Foundation Joint Venture vs.
Commissioner of Central Excise, Chandigarh 9 also observed in
connection with section 11A of the Central Excise Act, that suppression
means failure to disclose full information with intention to evade payment of
duty and the observations are as follows:
"10. The expression "suppression" has been used
in the proviso to Section 11A of the Act
8. 2013 (288) E.L.T. 161 (S.C.)
9. 2007 (216) E.L.T. 177 (S.C.)
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ST/50383/2018
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 11A the
burden is cast upon it to prove suppression of fact. An
incorrect statement cannot be equated with a wilful
misstatement. The latter implies making of an incorrect
statement with knowledge that the statement was not
correct."
(emphasis supplied)
25. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of
Central Excise (Adjudication) 10 also examined the issue relating to the
extended period of limitation under the proviso to section 73 (1) of the
Finance Act, 1994 11 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.
*****
Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer
10. 2018 (12) GSTL 368 (Del.)
11. the Finance Act 12 ST/50383/2018 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."
***** 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)
26. It would also be appropriate to refer the decision of the Delhi High Court in Mahanagar Telephone Nigam Ltd. vs. Union of India and others 12. The Delhi High Court observed that merely because MTNL had not declared the receipt of compensation as payment for taxable service, does not establish that it had wilfully suppressed any material fact. The Delhi High Court further observed that the contention of MTNL that receipt was not taxable under the Act is a substantial one and no intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return. The relevant portion of the observations are:
"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
12. W.P. (C) 7542 of 2018 decided on 06.04.2023 13 ST/50383/2018 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.
*****
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)
27. It is, therefore, clear from the aforesaid discussion that the extended period of limitation can be invoked only if there is suppression of facts with intent to evade payment of service tax. It is also clear that the show cause notice must disclose material as to why there was a deliberate intent to evade payment of service tax and in the absence of such intention which is evident from the material and record or from the conduct of the assessee, 14 ST/50383/2018 the extended period of limitation under the proviso to section 73(1) of the Finance Act cannot be invoked. The extended period of limitation cannot be invoked merely because the appellant had suppressed the material facts and had contravened to provisions of the Finance Act.
28. In the present case, as can be seen from the order, a conclusion has been drawn by the Commissioner (Appeals) that there was intent to evade payment of service tax merely because the appellant had contravened the provisions of the Finance Act while filing the self assessed returns of service tax.
29. Learned counsel for the appellant also contended that the appellant bonafide believed that it was not liable to pay service tax on the parking charges and such a belief of the appellant cannot be termed as malafide merely because the impugned order has ultimately held that the appellant was required to pay service tax on parking charges.
30. In this connection, it may be pertinent to refer to the decision of the Supreme Court in Commissioner of C. Ex. & Customs vs. Reliance Industries Ltd. 13. The Supreme Court held that if an assessee bonafide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be mala fide. If a dispute relates to interpretation of legal provisions, the department would be totally unjustified in invoking the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it is the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bonafide manner. The relevant portion of the judgment is reproduced below:
13. 2023 (385) E.L.T. 481 (S.C.) 15 ST/50383/2018 "23. We are in full agreement with the finding of the Tribunal that during the period in dispute it was holding a bona fide belief that it was correctly discharging its duty liability. The mere fact that the belief was ultimately found to be wrong by the judgment of this Court does not render such belief of the assessee a mala fide belief particularly when such a belief was emanating from the view taken by a Division Bench of Tribunal. We note that the issue of valuation involved in this particular matter is indeed one were two plausible views could co-
exist. In such cases of disputes of interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation by considering the assessee's view to be lacking bona fides. In any scheme of self-assessment it becomes the responsibility of the assessee to determine his liability of duty correctly. This determination is required to be made on the basis of his own judgment and in a bona fide manner.
24. The extent of disclosure that an assessee makes is also linked to his belief as to the requirements of law. *****. On the question of disclosure of facts, as we have already noticed above the assessee had disclosed to the department its pricing policy by giving separate letters. It is also not disputed that the returns which were required to be filed were indeed filed. In these returns, as we noticed earlier there was no separate column for disclosing details of the deemed export clearances. Separate disclosures were required to be made only for exports under bond and not for deemed exports, which are a class of domestic clearances, entitled to certain benefits available otherwise on exports. There was therefore nothing wrong with the assessee's action of including the value of deemed exports within the value of domestic clearances."
(emphasis supplied)
31. The show cause notice also alleged that an assessee is required to correctly discharge the service tax liability in an era of self-assessment, but 16 ST/50383/2018 the appellant did not include the amount of service tax towards parking charges.
32. This approach of the Commissioner cannot be countenanced. It is the duty of the officers scrutinizing the returns to examine the information disclosed by an assessee and the department cannot be permitted to take a plea that it is the duty of the assessee to disclose correct information and it is not the duty of the officers to scrutinize the returns.
33. In this connection, reference can be made to the decision of the Tribunal in M/s. Raydean Industries vs. Commissioner CGST, Jaipur 14. The Tribunal, in connection with the extended period of limitation, observed that even in a case of self-assessment, the department can always call upon an assessee and seek information and it is the duty of the proper officer to scrutinize the correctness of the duty assessed by the assessee. The Division Bench also noted that departmental instructions issued to officers also emphasise that it is the duty of the officers to scrutinize the returns. The relevant portion of the decision of the Tribunal in Raydean Industries is reproduced below:
"24. It would be seen that the ER-III/ER-I returns filed by the applicant clearly show that the applicant had categorically declared that it had cleared the final products by availing the exemption under the notification dated 17.03.2012. The applicant had furnished the returns on the basis of self assessment. Even in a case of self assessment, the Department can always call upon an assessee and seek information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 20028 that the assessee is expected to self assess the duty and sub-rule (3) of rule 12 of the 2002 Rules provides that the proper officer may, on the basis of information contained in the return filed by the assessee under sub-rule (1),
14. Excise Appeal No. 52480 of 2019 decided on 19.12.2022 17 ST/50383/2018 and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary call for such records and documents from the assessee, but that was not done. It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that the appellant should have filed a proper assessment return under rule 6 of the Rules.
25. Departmental instructions to officers also emphasise upon the duty of officers to scrutinize the returns. The instructions issued by the Central Board of Excise & Customs on December 24, 2008 deal with "duties, functions and responsibilities of Range Officers and Sector Officers". It has a table enumerating the duties, functions and responsibilities and the relevant portion of the table is reproduced below:
*****
26. The Central Excise Manual published by CBEC on May 17, 2005, which is available on the website of CBEC, devotes Part VI to SCRUTINY OF ASSESSMENT.
*****
27. It is thus evident that not only do the 2002 Rules mandate officers to scrutinise the Returns to verify the correctness of self assessment and empower the officers to call for documents and records for the purpose, Instructions issued by the department also specifically require officers at various levels to do so."
(emphasis supplied) 18 ST/50383/2018
34. The view that has been taken by the Commissioner was also not accepted by the Tribunal in G.D. Goenka and the observations are as follows:
"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 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)
35. In this connection, it may be pertinent to refer to the decision of the Tribunal in M/s. India Glycols Limited vs. Commissioner of CGST & Central Excise 15. The Tribunal held:
"39. What, therefore, transpires from the aforesaid decisions is that there can be a difference of opinion between the department and Revenue and an assessee may genuinely believe that it is not liable to pay duty. On the other hand, the department may have an opinion that the assessee is liable to pay duty. The assessee may, therefore, not pay duty in the self- assessment carried out by the assessee, but this would
15. Excise Appeal No. 52129 of 2019 decided on 20.08.2024 19 ST/50383/2018 not mean that the assessee has wilfully suppressed facts. To invoke the extended period of limitation, one of the five necessary elements must be established and their existence cannot be presumed merely because the assessee is operating under self assessment. If some duty escapes assessment, the officers of the department can always call upon the assessee to submit further documents and he may also conduct an enquiry. In fact when the audit was conducted, the officers of the audit team would have scrutinized the records and, therefore, notice should have been issued within the stipulated time from the date the audit was conducted. Even otherwise merely because facts came to light only during the audit does not prove that there was an intent on the part of the assessee to evade payment of duty."
(emphasis supplied)
36. The Tribunal in Sunshine Steel Industries vs. Commissioner of CGST, Customs & Central Excise, Jodhpur 16 observed that the department cannot be permitted to invoke the extended period of limitation by merely stating that it is a case of self-assessment. The relevant observations are:
"20. The Department cannot be permitted to invoke the period of limitation by merely stating that it is a case of self-assessment as even in a case of self-assessment, the Department can always call upon an assessee and seek information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 2002 that the assessee is expected to self-assess the duty and sub-rule (3) of rule 12 of the Rules provides that the proper officer may, on the basis of information contained in the return filed by the assessee under sub-rule (1), and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that
16. (2023) 8 Centax 209 (Tri.-Del.) 20 ST/50383/2018 every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary call for such records and documents from the assessee, but that was not done. It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that the appellant should have filed a proper assessment return under rule 6 of the Rules."
(emphasis supplied)
37. Civil Appeal No. 4246 of 2023 (Commissioner of CGST, Customs and Central Excise vs. Sunshine Steel Industries) filed by the department before the Supreme Court to assail the aforesaid decision of the Tribunal in Sunshine Steel Industries was dismissed by the Supreme Court on 06.07.2023 and the judgment is reproduced below:
"Delay condoned.
2. Heard learned counsel for the appellant.
3. This Court is not inclined to interfere with the impugned order of the High Court (Sic).
4. The appeal is dismissed.
5. Pending applications, if any, are disposed of."
38. The Commissioner (Appeals) also held that the appellant had not disclosed complete details in the returns that had been filed and it was only during audit that such facts were revealed.
39. It was for the officers scrutinizing the returns filed by the appellant to have required the appellant to produce the relevant documents.
40. In this connection, it would also be relevant to refer to the decision of the Tribunal in M/s. Kalya Constructions Private Limited vs. The 21 ST/50383/2018 Commissioner, Central Excise Commissionerate, Udaipur 17, wherein it was observed:
"11. Both the SCNs further state that had the audit not conducted scrutiny of the records, the short paying the service tax would not have come to notice. It is a matter of fact that all the details were available in the records of the appellant. The appellant was required to furnish returns under section 70 with the Superintendent of Central Excise which it did. It is for the Superintendent to scrutinize the returns and ascertain if the service tax had been paid correctly or not. If the assessee either does not make the returns under section 70 or having made a return, fails to assess the tax in accordance with the provisions of Chapter or Rules made thereunder, the Superintendent of Central Excise can make the best judgment assessment under section 72. For this purpose, he may require the assessee to produce such accounts, documents or other evidence, as he may deem necessary. Such being the legal position, if some tax has escaped assessment which came to light later during audit, all it shows is that the Superintendent of Central Excise with whom the returns were filed had either not scrutinized the returns or having scrutinized then found no error in self- assessment but the audit found so much later. Had the Superintendent scrutinized the returns calling for whatever accounts or records were required, a demand could have been raised within the normal period of limitation. The fact that the alleged short payment came to light only during audit does not prove the intent to evade payment of service tax by the appellant, but it only proves that the Range Superintendent had not done his job properly. For these reasons, we find that the demand for the extended period of limitation cannot be sustained."
(emphasis supplied)
17. Service Tax Appeal No. 54385 of 2015 decided on 15.11.2023 22 ST/50383/2018
41. The aforesaid decision of the Tribunal clearly holds that if facts come to the notice only when audit is carried out, does not mean that there was an intent to evade payment of service tax.
42. Thus, for all the reasons stated above, the Commissioner (Appeals) was not justified in holding that the extended period of limitation was correctly invoked.
43. The impugned order dated 06.11.2017 passed by the Commissioner (Appeals) upholding the invocation of the extended period of limitation under the proviso to section 73(1) of the Finance Act, therefore, cannot be sustained and is set aside. The appeal is, accordingly, allowed.
(Order Pronounced on 27.11.2025) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Shreya