Custom, Excise & Service Tax Tribunal
Fiitjee Limited vs Indore on 21 January, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH- COURT NO. I
Service Tax Appeal No. 53712 of 2018
(Arising out of Order-in-Appeal No. IND-EXCUS-000-APP-262/18-19 dated 20.08.2018
passed by the Commissioner (Appeals) Central Goods & Service Tax & Central Excise (CGST
& CX), Indore.)
M/s Stratford Academy Private Limited ....Appellant
(Now merged with M/s FIITJEE Limited)
Balaji Tower, 20/2, South Tukoganj
Opposite Tata Motors, Plasia Square
Indore, Madhya Pradesh
Versus
Commissioner (Appeals) Central Goods ...Respondent
& Service Tax & Central Excise (CGST & Cx), Indore Manik Bagh Palace, Post Box No. 10 Indore, Madhya Praesh-452001 APPEARANCE:
Shri Anil Bajaj, Chartered Accountant and Shri Pratham Gamta, Advocate for the Appellant Shri Anand Narayan, Authorized Representative for the Department CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Date of Hearing/ Decision: January 21, 2025 FINAL ORDER NO. 50095/ 2025 JUSTICE DILIP GUPTA The order dated 20.08.2018 passed by the Commissioner (Appeals) modifying the order dated 30.11.2017 passed by the Assistant Commissioner has been assailed in this appeal that has been filed by M/s Stratford Academy Private Limited (now merged with M/s FIITJEE Limited).
2. The operative part of the order passed by the Assistant Commissioner is reproduced below:
"(i) the Service Tax amounting to Rs. 2,75,451/-
(S.Tax Rs 2,67,399/- + Cess Rs. 5,348/- + H.E Cess Rs 2,674/-) is confirmed for recovery under 2 ST/53712/2018 Section 73 of the Finance Act, 1994 from the Noticee, by invoking extended period of limitation as per proviso to sub-section (1) of Section 73 of the Finance Act, 1994;
(ii) interest is ordered to be recovered at the appropriate rate, as the case may be, on the said confirmed amount of Rs. 2,75,451/- from them under the provisions of section 75 of the chapter V of Finance Act 1994;
(iii) a penalty of Rs. 2,75,451/- is imposed upon them under section 78 of the Finance Act, 1994 as discussed in foregoing paras;
(iv) interest amounting to Rs. 2,963/- ordered to be recovered from them under Section 75 of the Finance Act, 1994 on the delayed payment of service tax made during the period 2011-12 to 2013-14;
(v), penalty of Rs. 2000/- is imposed upon them under Section 76 of the Finance Act, 1994 for delayed payment of service tax made during the period 2011-12 to 2013-14;
The show cause notice issued under F. No. V (ST) 3- 333/SCN/2016-17/189 dated 03.01.2017 is disposed off accordingly."
3. The operative part of the order passed by the Commissioner (Appeals) is reproduced below:
"09. In view of the above discussions and findings, the impugned Appeal No.95-ST/IND/APPL/2018 filed by the Appellant is allowed in the following terms :-
(i) The Demand for Interest of Rs. 2963/- and penalty of Rs. 4000/- is upheld as confirmed by the Adjudicating Authority under the impugned Adjudication Order and the said amount interest of Rs. 2963/- and penalty of Rs. 4000/- said to be deposited vide CIN 69103330305201750068 by the Appellant are ordered for their appropriation.
(ii) The confirmed demand of Service Tax of Rs. 2,75,451/- is reduced to Rs. 1,82,559/- (S Tax of Rs. 1,77,243/- + Cess Rs.3,544/- + HE Cess Rs. 1,772/-) as discussed above.
(iii) The demand of interest on above confirmed amount of Service Tax is also upheld; and
(iii) The Penalty of Rs. 2,75,451/- imposed up on the Appellant by the Adjudicating Authority under Section 78 of Finance Act, 1994 is reduced to Rs. 1,82,559/-.
10. The impugned Adjudication Order is modified accordingly.
3 ST/53712/2018
11. The impugned appeal is accordingly disposed off."
(emphasis supplied)
4. The appellant is in the business of providing coaching to students. It merged with FITJEE Ltd. with effect from 01.04.2015.
5. A show cause notice dated 03.01.2017 was issued to the appellant alleging that for the period 2011-2012, it had shown less income of Rs. 26,73, 986/- in the ST-3 Returns and, thereby, made short payment of service tax to the extent of Rs. 2,75,421/-. The extended period of limitation under the proviso to section 73(1) of the Finance Act, 19941 was also invoked. The relevant paragraph of the show cause notice dealing with the aspect of extended period of limitation is reproduced below:
"8. In view of the above, it appears that the noticee have not paid service tax amounting to Rs 2,75,421/- for the period 2011-12 by way of willful mis-statement, suppression of facts and in contravention of provisions of Section 68 & Section 70 of the Finance Act, 1994 relating to levy and collection of service tax and Rules made there under with intent to evade payment of service tax. Therefore, it appears that the proviso to sub section (1) of Section 73 of the Finance Act, 1994 is applicable to invoke the extended period of five years for recovery of service tax not paid by the noticee."
6. The appellant filed a reply to the show cause notice contending that nothing had been suppressed from the department, more particularly when an audit of the records of the appellant had earlier been conducted. The appellant, therefore, stated that the extended period of limitation could not have been invoked. The relevant paragraphs of the reply are reproduced below:
"3.3.1 The Noticee submits that there was true and correct disclosure regarding the taxable services in the tax returns filed and therefore it cannot be alleged that there was suppression of facts on the part of Noticee. The Service Tax Audit for the year 2011-12 was conducted by Assistant Commissioner 1 the Finance Act 4 ST/53712/2018 (Audit) and issued an Audit Report No. 218/ST/12-
13 dated April 16, 2013 wherein no adverse observations / remarks were made. In such circumstance extended period of limitation cannot be invoked and the impugned Show Cause Notice should be quashed and demand raised for service tax, interest and penalty therein should be set aside.
3.3.2 In this regard, the Noticee places reliance on favourable judgement in the case of Commissioner of Central Excise vs. M/s MTR Foods Limited [2011-TIOL-696-HC-KAR-CX] wherein the Hon'ble High Court of Karnataka held as under:
xxx xxx xxx The Noticee places further reliance on the following judgments wherein the judicial authorities have held that the extended period of limitation cannot be invoked once the conclusive audit of the records of the assessee reveal no objections."
7. The Assistant Commissioner did not accept the plea taken by the appellant in regard to the invocation of the extended period of limitation and the relevant observations are as follows:
"D. Noticee has deliberately withheld the material facts from the department with intent to evade payment of Service Tax. They have knowingly and willingly suppressed the actual taxable value from the department with sole intention to evade payment of Service Tax. Therefore, for the said deliberate act of suppression of facts with intent to evade payment of Service Tax and contravention of the provisions of the Finance Act, 1994, the proviso to Section 73(1) of the Finance Act, 1994 appears to be invokable along with penalty under Section 78 of the Finance Act, 1994.
E. I observe that the noticee has contravened the various provisions of Sections of Finance Act, 1994. Had the audit not been conducted of the records of the Noticee, the short payment/non-payment would have gone undetected. Therefore suppression of facts, willful mis-statement etc. with intents to evade payment of Service Tax, is rightly invoked in this case). In this regard I place reliance on the following case laws:
I find that in the case of M/s. Shoppers Stop Ltd. Vs. Commissioner of Service Tax Mumbai-ll (2013(2)CS (204) (Tri-Mum) it has been held by the Hon'ble Tribunal that:
"From the facts available on record it is seen that the matter came to light only when the department started investigation into the activities of the 5 ST/53712/2018 appellant. Therefore, it cannot be concluded at this stage that there was no suppression of facts on the part of the appellant"
8. Feeling aggrieved, the appellant filed an appeal before the Commissioner (Appeals). The relevant portion of the order passed by the Commissioner (Appeals) in relation to the extended period of limitation is reproduced below:
"08.1 As regards to suppression of income of Rs. 26,73, 986/- in the ST-3 returns for the year 2011-12 as compared to Balance Sheet for the year 2011-12 of the Appellant, I find force in the Appellant's contention that the Assessable Value of taxable Services for the month of Feb 2012 has been taken as Rs. 79,889/- instead of correct value of Rs. 7,98,889/- which is reflecting as Assessable Value shown in their returns for the said month. Thus I find that the correct Assessable value for the year 2011-12 shown in ST-3 returns comes to Rs.8,31,56,164/- instead of Rs. 8,24,39,164/-. This was very much verifiable from the ST-3 returns of the Appellant, to which I find that it's a sorry state of affair on the part of the Adjudicating Authority in as much as he failed to give any speaking order on verification of the correct Assessable Value as declared in the ST-3 returns. Thus, I find that the Service Value un- reported in ST-3 returns as compared to that of Balance Sheet of the Appellant comes down to Rs. 19,54,986/-. However, I don't find any force in the Appellant contention that the said amount relates to activities not subject to Service Tax as nothing has been brought on record by the Appellant in support of their claim that the said income of Rs. 19,54,986/- was from non-taxable Services. In this regard, I find that the burden of proof is on the Appellant to prove that said amount of Rs. 19,54,986/- received by them pertain to non- taxable services, which they have failed to discharge. Accordingly, in the absence of any evidence on record that said amount is not from provision of taxable service, I hold that said amount is taxable receipt on which Service Tax due thereon is payable.
08.2 In view of above, I am of the view that the Appellant suppressed their taxable income of Rs. 19,54,986/- from the Service Tax department by not showing the same in their ST-3 returns, therefore I find that the Adjudicating Authority rightly confirmed the demand of Service Tax by invoking extended 6 ST/53712/2018 period provisions. However in the facts of the matter, I find that the Appellant is eligible for tax- cum benefit while arriving their Service Tax liabilities. Therefore, I find that the Appellant have short paid Service Tax of Rs. 1,82,559/- ( S Tax of Rs.1,77,243/- + Cess Rs. 3,544/- + HE Cess Rs.1,772/-) which needs to be recovered along with interest.
08.3 As regards to time limitation. I observe that the Show Cause Notice in the case was issued on the basis of findings by the AGMP Audit officers, the Appellant's contention that they have submitted all required documents and also filed their monthly returns regularly and that the allegation of suppression of facts or contravention or any willful mis-statement of facts is factually incorrect, as the Appellant at no point of time disclosed the excess income to the Department. Even while going through the Balance Sheet of the Appellant they have shown other income of Rs. 17,52,365/- in Note No.15 whereas in Note 15 "Other Income"
they have shown Rs.32,434/- thus clearly shows mis-statement on the part of the Appellant. Thus. I find that the Appellant willfully suppressed the fact of having additional income which they hide from the Service Tax Department by not disclosing in their ST-3 returns of the relevant period. As regards to their claim that Departmental Audit being conducted for the relevant period, the Departmental Audit is carried out on random selection basis, and with the limited time-slot for the audit it is not entirely possible to verify all intricate details of an Assessee for entire year or more. I also find that nothing has been brought on record that the issue of "Other Income" was ever discussed by them with the Departmental Audit Officers.
Therefore, I find that the Appellant's contention of demand being hit by time limitation holds no water, as the factor of "suppression of fact with intent to evade payment of duty" is present in this case.
Hence, Invocation of extended period of time is lawful. I also find that the ratio of case laws cited by the appellant is not applicable in this case."
(emphasis supplied)
9. In is this order dated 20.08.2018 that has been assailed by the appellant in this appeal.
10. Shri Anil Bajaj, learned consultant appearing for the appellant, assisted by Shri Pratham Gamtla, apart from submitting that the 7 ST/53712/2018 demand proposed in the show cause notice could not have been made, also submitted that the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act could not have been invoked. In this connection, learned consultant pointed out that though the appellant is engaged in the business of providing coaching to students but the appellant also provided pickup and drop facility to the students by hiring buses from various independent vendors but the appellant did not charge any markup amount from the students for providing the pickup and drop facility. Learned consultant, therefore, submitted that service tax was paid by the appellant only on the coaching fees recovered from the students. Learned consultant also pointed out that an extensive audit of the appellant was conducted by the audit party under Excise Audit Manual 2000 for the financial year 2011-12 for the period from 01.04.2011 to 31.03.2012 and the appellant had received a notice from the audit party on 11.12.2012 seeking information about the value of services and service tax paid and the balance sheet and the trial balance. The records of the appellant were also verified by the audit party. Thereafter, a report dated 16.04.2013 was submitted by the audit without raising any objection about the bus charges received from the students. Learned consultant also pointed out that after one and a half years of the aforesaid report dated 16.04.2013, the appellant received letters dated 06.01.2015 and 14.01.2015 from Central Excise Revenue Audit seeking information for the financial years 2011-12 to 2013-14. According to the appellant, information was supplied by a letter dated 05.02.2015, but after two years of the filing of the reply a show cause notice dated 03.01.2017 was issued to the appellant proposing to raise a demand by invoking the extended period of limitation. Learned 8 ST/53712/2018 consultant, therefore, submitted that in such circumstances, the extended period of limitation could not have been invoked. Learned consultant further pointed out that in any view of the matter the demand for the period from April, 2011 to September, 2011 is even beyond the period of five years contemplated under section 73(1) of the Finance Act and, therefore, the demand for this period could not have been confirmed.
11. Shri Anand Narayan, learned authorized representative appearing for the department has, however, supported the impugned order and submitted that as the appellant had failed to mention the amount received from the students towards bus charges in the ST-3 Returns, it is a clear case where the appellant suppressed information from the department. Learned authorized representative, therefore, submitted that the Commissioner (Appeals) committed no illegality in confirming that part of the order passed by the Assistant Commissioner that confirms the invocation of the extended period of limitation.
12. In order to appreciate the submissions advanced by the learned consultant for the appellant and the learned authorized representative appearing for the department, it will be appropriate to reproduce section 73(1) of the Finance Act as its stood at the relevant time. It is as follows:
"73.(1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within one year from the relevant date, serve notice on 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:
9 ST/53712/2018 PROVIDED that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of-
(a) fraud; or
(b) collusion; or
(c) wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "one year", the words "five years" had been substituted.
13. It would be seen from a perusal of sub-section (1) of section 73 of the Finance Act that where any service tax has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the service tax which has not been levied or paid, requiring him to show cause why he should not pay amount specified in the notice.
14. The „relevant date‟ has been defined in section 73 (6) of the Finance Act as follows;
"73(6) For the purpose of this section, "relevant date"
means,-
(i) In the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short paid-
(a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed;
(b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules;
(c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder;"
10 ST/53712/2018
15. The proviso to section 73(1) of the Finance Act stipulates that where any service tax has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Chapter or the Rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax, the provisions of the said section shall have effect as if, for the word "one year", the word "five years" has been substituted.
16. The appellant has submitted a chart to substantiate that the demand raised for the period from April 2011 to September 2011 is even beyond the period of five years. The said chart would also show the demand for the period from October, 2011 to March, 2012. The said chart is reproduced below:
Particulars Date of Due Date Relevant Expiry of Filing of of Filing of Date five years Return Return from relevant date ST-3 from April 04.11.2011 26.12.2011 25.10.2011 04.11.2016 2011 to September 2011 ST-3 from 25.04.2012 25.04.2012 25.04.2012 25.04.2017 October 2011 to March 2012
17. This aforesaid chart is not disputed by learned authorized representative appearing for the department.
18. It is, therefore, clear that the demand for the period from April, 2011 to September, 2011 is hit by limitation as it is even beyond the period of five years.
19. The next issue that arises for consideration is whether the extended period of limitation could have been invoked in the facts and 11 ST/53712/2018 circumstances of the case for the period from October, 2011 to March, 2012.
20. As pointed out by the appellant, an extensive audit was conducted under the Excise Audit Manual, 2000 for the financial year 2011-12 from 01.04.2011 to 31.03.2012. The records of the appellant were verified by the audit party and the appellant had also submitted the balance sheet and the trial balance through a letter dated 21.03.2013. The trial balance specifically makes a mention of the bus charges receipts of Rs. 15,92,050/-. The department was, therefore, aware of the fact that the appellant had been collecting bus charges when the audit was conducted on 11.12.2012 for the financial year 2011-12.
21. The appellant has also pointed out that the Assistant Commissioner (Audit) in his report dated 16.04.2003, found nothing objectionable regarding the bus charges.
22. Thereafter, another audit was conducted by the Central Excise Revenue Audit for the financial year 2011-12 to 2013-14. This audit was conducted in the year January, 2015.
23. It transpires that a show cause notice dated 03.01.2017 was thereafter issued to the appellant proposing a demand for the bus charges received by the appellant for the financial year 2011-12 by invoking the extended period of limitation.
24. In the present appeal, the period from October, 2011 to March, 2012 requires consideration as the demand for the period from April, 2011 to September, 2011 is even beyond the stipulated period of five years. For invoking the extended period of limitation under the proviso to section 73(1) of the Finance Act, what has to be seen first is whether the appellant had suppressed facts from department and then 12 ST/53712/2018 to see whether such suppression was with an intent to evade the payment of service tax.
25. It is correct that section 73 (1) of the Finance Act does not mention that suppression of facts has to be "wilful‟ since "wilful‟ precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression "wilful" before "suppression of facts" under section 73(1) of the Finance Act, suppression of facts has still to be willful and with an intent to evade payment of service tax. The Supreme Court and the Delhi High Court have held that suppression of facts has to be "wilful‟ and there should also be an intent to evade payment of service tax.
26. Before adverting to the decisions of the Supreme Court and the Delhi High Court, it would be useful to reproduce the proviso to section 11A of Central Excise Act, 1944, as it stood when the Supreme Court explained "suppression of facts" in Pushpam Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay2. It is as follows:
"11A: Where any duty of excise has not been levied or paid or has been short-levied or short-pain or erroneously refunded, by the reason of-
(a) fraud; or
(b) collusion; or
(c) any wilful misstatement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Act of the rules made thereunder with intent to evade payment of duty by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant dated, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under Section 11AA and a penalty equivalent to the duty specified in the notice."
2. 1995 (78) E.L.T. 401 (SC) 13 ST/53712/2018
27. In Pushpam Pharmaceuticals Company, the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since "suppression of facts‟ has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. The observations are as follows:
"4. Section 11A empowers the Department to re- open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of court the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from 14 ST/53712/2018 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)
28. This decision was referred to by the Supreme Court in Anand Nishikawa Company Ltd. vs. Commissioner of Central Excise3 and the observations are as follows:
"26........... This Court in the case of Pushpam Pharmaceutical Company v. Collector of Central Excise, Bombay, while dealing with the meaning of the expression "suppression of facts" in proviso to Section 11A of the Act held that the term must be construed strictly. It does not mean any omission and the act must be deliberate and willful to evade payment of duty. The Court, further, held :-
"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
3. 2005 (188) E.L.T. 149 (SC) 15 ST/53712/2018 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)
29. These two decisions in Pushpam Pharmaceuticals and Anand Nishikawa Company Ltd. were followed by the Supreme Court in the subsequent decision in Uniworth Textile Limited vs. Commissioner of Central Excise, Raipur4 and the observation are:
"18. We are in complete agreement with the principal enunciated in the above decisions, in light of the proviso to section 11A of the Central Excise Act, 1944."
30. The Supreme Court in Continental Foundation Joint Venture Holding vs. Commissioner of Central Excise, Chandigarh-I5 also held:
"10. The expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct."
(emphasis supplied)
4. 2013 (288) E.L.T. 161 (SC)
5. 2007 (216) E.L.T. 177 (SC) 16 ST/53712/2018
31. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication)6 also examined at length the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Finance Act and held as follows;
"27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word "suppression‟ in the proviso to Section 11A(1) of the Excise Act has to be read in the context of other words in the proviso, i.e. "fraud, collusion, wilful misstatement". As explained in Uniworth (supra), "misstatement or suppression of facts" does not mean any omission. It must be deliberate. In other words, there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a positive act of the assessee to avoid excise duty.
xxxx Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention."
xxxx The Revenue has not been able to prove an intention on the part of the Appellant to avoid tax by suppression of mention facts. In fact it is clear that the Appellant did not have any such intention and was acting under a bonafide belief."
(emphasis supplied)
32. It would also be useful to refer to a decision of the Tribunal in Shiv-Vani Oil & Gas Exploration Services Ltd. vs. C. S. T., New Delhi7, wherein the Tribunal after making reference to the decision of
6. 2018 (12) GSTL 368 (Del.)
7. 2017 (47) STR 200 (Tri-Del.) 17 ST/53712/2018 the Supreme Court in Cosmic Dye Chemical vs. CCE, Bombay8, observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoked. The observations are as follows:
"8. Regarding the demand for extended period, we find the reason given by the Original Authority is not legally sustainable. In fact he recorded that in terms of proviso to Section 73 of Finance Act, 1994, the intention to evade payment of duty is not required to invoke extended period or to impose penalty. We find that for invoking extended period as well as for imposing penalty under Section 78, the legal provisions are identical. The words used like fraud, collusion, willful mis-statement, suppression of fact or contravention of any provisions of Chapter V of Finance Act, 1994 or of the Rules made thereunder with intent to evade the payment of Service Tax, will show that the ingredient of mala fide is a pre-requisite to invoke both the legal provisions (proviso to Section 73 and Section 78). The Original Authority recorded that it may be true that the assessee has not contravened any provisions with intend to evade payment of service tax, however, he proceeded to confirm the demand for extended period and to impose penalty of an equal amount under Section 78. We find that Hon‟ble Supreme Court in Cosmic Dye Chemical v. CCE, Bombay reported in 1995 (75) E.L.T. 721 (S.C.) held as below :-
Now so far as fraud and collusion are concerned, it is evident "6. that the requisite intent, i.e., intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word "wilful"
preceding the words "mis-statement 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
8. 1995 (75) E.L.T. 721 (SC) 18 ST/53712/2018 to say that there can be a suppression or mis- statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Misstatement or suppression of fact must be wilful."
33. It is, therefore, clear from the aforesaid discussion that the extended period of limitation could have been invoked only if there was suppression of facts with intent to evade payment of service tax.
34. In view of the facts stated above and the decisions referred to above, it cannot be said that the appellant had suppressed material facts from the department. As noted above, in the first audit conducted on 11.12.2012, entire records of the appellant were examined including the balance sheet and the trial balance which clearly mention the receipt of bus charges from the students. In fact a clean chit was given to the appellant in the report dated 16.04.2013 submitted by the Assistant Commissioner (Audit).
35. The order dated 30.10.2017 passed by the Assistant Commissioner mentions that as the appellant had not stated about the bus receipts in the ST-3 Returns, it would mean that the appellant had contravened by various provisions of the Finance Act and had the audit not been conducted of the records of the appellant, short payment of service tax would not have been detected. After having noticed this, the Assistant Commissioner merely observes "therefore suppression of facts, willful statement etc. with intent to evade the payment of service tax is rightly invoked in this case. The relevant observation is:
"E. I observe that the noticee has contravened the various provisions of Sections of Finance Act, 1994. Had the audit not been conducted of the records of the Noticee, the short payment / non-payment would have gone undetected. Therefore suppression of facts, willful mis-statement etc. with intents to evade payment of Service Tax, is rightly invoked in this case."
19 ST/53712/2018
36. The Commissioner (Appeals) has referred to the balance sheet for the year 2011-12 in the impugned order and has noticed that if the ST-3 Returns and the balance sheet were compared, the correct sustainable value for the year 2011-12 shown in the ST-3 Returns would come to Rs. 8,31,56,164/- and not Rs. 8,24,31,164/- as noticed by the Assistant Commissioner. The Commissioner (Appeals), however, further concluded that since the appellant suppressed taxable income of Rs. 19,54,986/- by not showing the same in the ST- 3 Returns, the Assistant Commissioner was justified in confirming the demand of service tax by invoking the extended period of limitation.
37. The Commissioner (Appeals) failed to notice that during the audit conducted in the year 2012, the records produced by the appellant before the audit party clearly show the income from bus receipts. If there was any doubt, a show cause notice could have been issued at that point of time. The issuance of a show cause notice almost after five years alleging that the appellant had suppressed material facts from the department is, therefore, not justified. This apart even if the appellant had suppressed facts, it was obligatory on the part of the department to establish that the appellant had suppressed facts with an intention to evade payment of service tax. The invocation of the extended period of limitation, therefore, for the period October, 2011 to March, 2012 cannot also be sustained.
38. What transpires from the aforesaid discussion is that the service tax demand for the period from April, 2011 to September, 2011 is beyond the period of five years and the service tax demand from October, 2011 to March, 2012 could not have been confirmed and the extended period of limitation could not have been invoked.
20 ST/53712/2018
39. The impugned order 20.08.2018 passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside. The appeal is, accordingly, allowed.
(Order dictated in the Open Court) (JUSTICE DILIP GUPTA) PRESIDENT (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) Shenaj