VKJ Latest News Update

VKJ Law Offices of Vinay K. Jain Advocates & Solicitors

ST – It is settled legal position that mere failure to disclose does not amount to suppression of fact; there has to be a positive, conscious, and deliberate action intended to evade tax: CESTAT

2019-TIOL-2065-CESTAT-DEL

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL 
PRINCIPAL BENCH, DELHI
COURT NO. III

Service Tax Appeal No. 52508 of 2018 [SM]

Arising out of Order-in-Appeal No. 194(CKJ) ST/UDR/2018, Dated 26.03.2018
Passed by the Commissioner(Appeals), Central Excise and CGST, Udaipur

Date of Hearing: 17.05.2019
Date of Decision: 17.05.2019

M/s RUCHI SOYA INDUSTRIES LTD
A 69-70, UDYOG VIHAR, RIICO INDUSTRIAL AREA
SRIGANGANAGAR, RAJASTHAN

Vs

COMMISSIONER CENTRAL EXCISE AND CGST
UDAIPUR, 142-B, HIRAN MAGRI, SECTOR-11
UDAIPUR (RAJASTHAN)

Appellant Rep by: Mr Soumya Mehrotra, Adv.
Respondent Rep by: 
Ms Tamana Alam, AR

CORAM: Ajay Sharma, Member (J)

ST – The assessee is recipient of taxable service namely “Transport of Goods by Road Service” – During scrutiny of ST-3 return filed by assessee for the period October, 2012 to March, 2013, it was observed that they had short paid service tax – Accordingly, a SCN was issued to them for demand of service tax under Section 73(1) alongwith interest under Section 75 of FA, 1994 – Penalty under Section 76 of FA, 1994 was also proposed to be imposed – The SCN has been issued admittedly beyond the stipulated period of eighteen months – Admittedly, no allegation of suppression has been invoked against assessee in SCN – Meaning thereby that the notice has been issued without there being any justification for invoking the extended period of limitation – It seems that in this matter the extended period of limitation has been invoked in a mechanical manner without adducing any proof/evidence to establish that provision of Section 73 ibid are attracted – Mere failure to pay duty or disclose a transaction or a mere misstatement is not sufficient for invocation of extended period of limitation unless it is due to any fraud, collusion or wilful misstatement or suppression of fact or contravention of any provision – There has to be a positive, conscious, and deliberate action intended to evade tax – The assessee has not suppressed any facts from the department and the impugned SCN itself states that it has been issued on the basis of ST-3 returns submitted by assessee – No suppression found on the part of assessee as would entitle the revenue to invoke extended period of limitation – Otherwise also, it is settled legal position that mere failure to disclose does not amount to suppression of fact – The invocation of the extended period of limitation is erroneous and the SCN is itself illegal and the same is set aside on this ground itself without going into any other issues in the matter: CESTAT

Appeal allowed

Case laws cited:

CCE v. Ballarpur Industries Ltd – 2007-TIOL-153-SC-CX… Para 4

Anand Nishikawa Co. Ltd. v. CCE, Meerut – 2005-TIOL-118-SC-CX… Para 4

FINAL ORDER No. 50703/2019

Per: Ajay Sharma:

The instant Appeal has been filed from the impugned order dated 26.03.2018 passed by the Commissioner(Appeals), Central Excise & CGST, Udaipur in Order-in-Appeal No. 194(CKJ) ST/UDR/2018.

2. The facts of the Appeal are as under:

The appellant is recipient of taxable service namely “Transport of Goods by Road Service”. During the scrutiny of ST-3 return filed by the appellant for the period October, 2012 to March, 2013, it was observed that they had short paid service tax amounting to Rs. 1,09,945/-. Accordingly, a show cause notice dated 23.02.2015 was issued to them for demand of service tax amounting Rs. 1,09,945/- under Section 73(1) alongwith interest under Section 75of the Finance Act, 1994. Penalty under Section 76 of the Finance Act, 1994 was also proposed to be imposed. The Adjudicating Authority vide Order dated 02.07.2015 confirmed the demand of service tax of Rs. Rs. 1,09,945/- and ordered it to be recovered from the appellant alongwith interest and penalty. On Appeal, the learned Commissioner upheld the decision of the Adjudicating Authority and dismissed the Appeal filed by the Appellant.

3. I have heard learned counsel for the Appellant and learned Authorised Representative for the Revenue and perused the records of the case. The dispute in the matter is short payment of Service Tax of Rs. 1,09,945/- by the appellant in respect of ‘Transportation of Goods by Road Service’ in contravention of the provisions of Section 68(2) of the Finance Act, 1994 r/w Rule 2(1)(d)(B) and Rule 6 of Service Tax Rule, 1994. The learned counsel for the Appellant raised a preliminary issue about limitation stating that it is not disputed that the period in dispute is from October, 2012 to March, 2013, whereas the show cause notice was issued on 23.02.2015 which is beyond the normal period of limitation i.e. beyond 18 months and that the appellant filed the statutory return on 01.09.2013 itself and there is no whisper in the show cause notice about any fraud or suppression on the part of the Appellant. He further submitted that although the appellant raised this issue before the learned Commissioner also but the same was rejected by him. He also submitted that the appellant after the issuance of the show cause notice, filed a revised return on 05.05.2015 since there was some clerical error in the original return. The learned authorised representative on the other hand submitted that although suppression has not been alleged in the show cause notice but since the appellant filed the revised return on 05.05.2015 that itself shows that there was suppression on the part of the appellant.

4. The Hon’ble Supreme Court in the matter of CCE v. Ballarpur Industries Ltd., (2007) 8 SCC 89 = 2007-TIOL-153-SC-CX while interpreting the word “suppression” has held that the department was not entitled to invoke the extended period of limitation since there was no suppression and laid down as under:-

“24. In Continental Foundation Joint Venture Holding v. CCE [(2007) 10 SCC 337] = 2007-TIOL-152-SC-CX a show-cause notice under Section 11-A of the 1944 Act was issued to the assessee invoking extended period of limitation on the grounds of suppression, fraud and collusion. The Division Bench of this Court, to which one of us, Kapadia, J., was the member, held that where various circulars, instructions/directions stood issued at different points of time and where there was no clarity in the views expressed by the authorities, extended period of limitation cannot be invoked. It was held that the word “suppression” in Section 11-A of the 1944 Act is accompanied by the words “fraud” or “collusion” and, therefore, the word “suppression” should be construed strictly. That, mere omission to give correct information did not constitute suppression unless that omission was made wilfully in order to evade duty. That, suppression would mean failure to disclose full and true information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party would not constitute suppression. That, an incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement made was not correct.”

The Hon’ble Supreme Court in the matter of Anand Nishikawa Co. Ltd. v. CCE, Meerut reported in 2005 (188) ELT 149 = 2005-TIOL-118-SC-CX also, laid down that ‘suppression of fact’ can have only one meaning and that is that the correct information was not disclosed deliberately to evade payment of duty.

5. In the instant matter, the show cause notice has been issued admittedly beyond the stipulated period of eighteen months. Admittedly, no allegation of suppression has been invoked against the Appellant in the show cause notice. Meaning thereby that the notice has been issued without there being any justification for invoking the extended period of limitation. Section 73 permits extended recovery for a period of upto five years in cases of fraud, collusion, wilful mis-statement, suppression of facts or contravention of the Finance Act or Rules with intent to evade payment of service tax. But for this purpose show cause notice must allege and state fraud, collusion, wilful mis-representation, suppression of facts, etc. It seems that in this matter the extended period of limitation has been invoked in a mechanical manner without adducing any proof/evidence to establish that provision of Section 73 ibid are attracted. There must be some positive act from the side of the assessee to find wilful suppression. In my view, mere failure to pay duty or disclose a transaction or a mere misstatement is not sufficient for invocation of the extended period of limitation unless it is due to any fraud, collusion or wilful misstatement or suppression of fact or contravention of any provision. There has to be a positive, conscious, and deliberate action intended to evade tax, e.g., a deliberate mis-statement or suppression in order to evade tax. The Appellant has not suppressed any facts from the department and the impugned show cause notice itself states that it has been issued on the basis of the ST-3 returns submitted by the Appellant. I do not find any suppression on the part of the appellant as would entitle the revenue to invoke extended period of limitation. Otherwise also, it is settled legal position that mere failure to disclose does not amount to suppression of fact. A positive act on the part of the assesee is necessary to justify invocation of extended period of limitation. Therefore the invocation of the extended period of limitation in the instant matter is erroneous and the show cause notice is itself illegal and the same is hereby set aside on this ground itself without going into any other issues in the matter.

6. The appeal is therefore allowed with consequential relief, if any.

[Operative part pronounced in the open Court]

Leave a Reply

Close Menu
%d bloggers like this: