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CX – Mere omission to pay tax and revenue inability to prove any mental intent to evade taxes per se cannot result in invocation of extended period of limitation: HC

2019-TIOL-1794-HC-RAJ-CX

IN THE HIGH COURT OF RAJASTHAN

AT JODHPUR

DB Central/Excise Appeal No.3/2019

M/s SISODIA ASSOCIATE
89-90, FIRST FLOOR, NAGORI GARDEN
BHILWARA RAJASTHAN THROUGH ITS
PROPRIETOR AND AUTHORIZED
SIGNATORY SHRI ASHOK SISODIA

Vs

COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX
CGST, JAIPUR, NCRB, STATUE CIRCLE, C-SCHEME, JAIPUR

S Ravindra Bhat & Vinit Kumar Mathur, JJ

Dated: August 6, 2019

Appellant Rep by: Mr Anil Bhansali
Respondent Rep by: 
Mr Rajvendra Saraswat

CX – The issue is with respect to the invocation of extended period of limitation – The law is well settled that in the absence of any proven or established allegations of existence of active intent to defeat the law or to cheat the revenue, the revenue cannot claim the benefit of an extended period of limitation – In this regard, Court is cognizant of decisions of Supreme Court in Chempher Drugs & Liniments – 2002-TIOL-266-SC-CX, Uniworth Textiles Ltd – 2013-TIOL-13-SC-CUS and Pushpam Pharmaceuticals Ltd. – 2002-TIOL-235-SC-CX – The mere omission to pay tax and revenue inability to prove of any mental intent to evade taxes per se cannot result an invocation of the extended period of limitation – However, the revenue is entitled to collect service tax dues in accordance with law for the normal period of six months prior to the issuance of SCN: HC

Appeal partly allowed

Case laws Cited:

Collector of Central Excise vs. Chempher Drugs & Liniments – 2002-TIOL-266-SC-CX…Para 7

Uniworth Textiles Ltd vs. Commissioner of Central Excise – 2013-TIOL-13-SC-CUS…Para 7

Pushpam Pharmaceuticals Ltd. vs. Collector of Central Excise – 2002-TIOL-235-SC-CX…Para 7

JUDGEMENT

Heard the appeal with consent of counsel for the parties.

2. Two questions of law are urged on behalf of the assessee: (i) that the activity performed by it does not match the description of ‘business auxiliary service’.

3. Learned counsel urged that though the appellant/assessee introduces potential consumers to the bank, and charges commission as and when the advance is made, since banking per se is not subjected to service tax levy, the service in question cannot be termed as a business auxiliary service.

4. At the outset, this Court notices that this question was given up by the assessee during the hearing of the appeal; no question of law arises on this aspect.

5. The second question urged is with respect to the invocation of the extended period of limitation. In the present case, the disputed period is between 01/04/2005 and 05/09/2008.

6. The law is well settled that in the absence of any proven or established allegations of existence of active intent to defeat the law or to cheat the revenue [expression used in Section 11A of the Central Excise Act “fraud or willful misrepresentation or suppression of facts”], the revenue cannot claim the benefit of an extended period of limitation.

7. In this regard, Court is cognizant of decisions of the Supreme Court in Collector of Central Excise vs. Chempher Drugs & Liniments, 1989 (40) ELT 276 (SC) = 2002-TIOL-266-SC-CXUniworth Textiles Ltd vs. Commissioner of Central Excise, 2012(9) SCC 753 = 2013-TIOL-13-SC-CUS and Pushpam Pharmaceuticals Ltd. vs. Collector of Central Excise, 1995 Suppl (3) SCC 462 = 2002-TIOL-235-SC-CX.

8. In these circumstances, the mere omission to pay tax and the revenue inability to prove of any mental intent to evade taxes per se cannot result an invocation of the extended period of limitation .

9. Consequently, the invocation of the extended period is held to be bad in law. However, the revenue is entitled to collect service tax dues in accordance with law for the normal period of six months prior to the issuance of the show cause notice.

The appeal is partly allowed in the above terms.

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