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ST – Positive action with a negative intention of wilful and deliberate default is a mandatory prerequisite to conclude wilful mis-statement or suppression in order to invoke extended period: CESTAT

2019-TIOL-2198-CESTAT-ALL

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH, ALLAHABAD
COURT NO. I

Service Tax Appeal Nos. 70683 to 70686 of 2016-CU[DB]
In Service Tax Appeal No.70683 of 2016

Arising out of Order-in-Original No. LKO/EXCUS/000/COM/ST/100/2015-16, Dated: 30.03.2016
Passed by Commissioner of Central Excise and Service Tax, Lucknow

Date of Hearing: 25.04.2019
Date of Decision: 16.05.2019

M/s BAJAJ INFRASTRUCTURE DEVELOPMENT COMPANY LTD
(UNIT-UTRAULA, DISTT. GONDA (U.P.)

Vs

COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX
(7-A, ASHOK MARG, LUCKNOW)

WITH

(i) Service Tax Appeal No.70684 of 2016 
(M/s Bajaj Infrastructure Development Company Ltd.)

Arising out of Order-in-Original No.LKO/EXCUS/000/COM/ST/099/2015-16, Dated: 30.03.2016
Passed by Commissioner of Central Excise and Service Tax, Lucknow)

(ii) Service Tax Appeal No.70685 of 2016
(M/s Bajaj Infrastructure Development Company Ltd)

(Arising out of Order-in-Original No. LKO/EXCUS/000/COM/ST/098/2015-16, Dated: 30.03.2016
Passed by Commissioner of Central Excise and Service Tax, Lucknow

(iii) Service Tax Appeal No.70686 of 2016
(M/s Bajaj Infrastructure Development Company Ltd)

Arising out of Order-in-Original No. LKO/EXCUS/000/COM/ST/101/2015-16, Dated: 30.03.2016
Passed by Commissioner of Central Excise and Service Tax, Lucknow

Appellant Rep by: Shri Piyush Kumar, Shri Jitendra Singh, Advs. & Shri M K Kaushik, Representative
Respondent Rep by: Shri Mohammad Altaf, Assistant Commissioner, AR

CORAM: Archana Wadhwa, Member (J)
Anil G Shakkarwar, Member (T)

ST – It was alleged in the show cause notices that appellant had vivisected service portion of the works contract into 4 subheads and paid service tax treating each subhead as separate service and the same did not appear to be in accordance with the provisions of law – It was alleged in the said show cause notice that the entire contract dated 28.12.2009 was properly classifiable as ‘Works Contract Service’ and is to be taxed accordingly – SCNs issued invoking the extended period of limitation – demands confirmed along with penalty and interest, therefore, appeal before CESTAT.

Held: Reliance for issuance of show cause notice is placed on ST-3 returns filed by the appellant – From the show cause notice and the Order-in-Original, Bench could not come across any contention to establish that there was any observation that any information submitted in the said ST-3 return was not proper – Supreme Court in the M/s Uniworth Textiles Ltd. – 2013-TIOL-13-SC-CUS has held that the positive action with a negative intention of wilful and deliberate default is a mandatory prerequisite to conclude wilful misstatement or suppression in order to invoke extended period – ST-3 returns were regularly filed and there were no observations made in the proceedings that information was lacking in the said ST-3 returns and there was no observation that the incomplete or incorrect information was submitted through ST-3 returns, therefore, the extended period of limitation was not available to revenue – without going into merit of the case Bench holds that all the 4 show cause notices were not sustainable – Since, the extended period of limitation was not available to revenue, all the four impugned Orders-in-Original are set aside and appeals are allowed: CESTAT [para 7]

Appeals allowed

Case laws cited:

Continental Foundation Joint Venture Sholding Nathpa Vs Commissioner of Central Excise, Chandigarh-I – 2007-TIOL-152-SC-CX… Para 5

Commissioner of Central Excise, Kolkata VI Vs ITC Ltd – 2013-TIOL-1135-CESTAT-KOL… Para 5

M/s Uniworth Textiles Ltd. Vs Commissioner of Central Excise, Raiput – 2013-TIOL-13-SC-CUS… Para 5

Gammon Far Chems Ltd., Vs Collector of Central Excise, Bangalore 1994 (71) ELT 59 (Tribunal)… Para 5

Gujarat State Petronet Ltd., Vs Commissioner of Customs & Central Excise Ahmedabad – 2013-TIOL-2300-CESTAT-AHM… Para 5

Apex Electrical Pvt. Ltd., 1992 (61) ELT 413 (Guj)… Para 5

Collector of Central Excise Versus Chemphar Drugs & Liniments – 2002-TIOL-266-SC-CX… Para 7

FINAL ORDER NOS. 70959-70962/2019

Per: Anil G Shakkarwar:

Above stated 4 appeals are taken together for disposal, since the appeals are in respect of single contract entered into by the appellant and the appeals are in respect of 4 different units belonging to the same appellant located at 4 difference places and the issue is same.

2. Brief facts of the case are that the appellants are registered with Service Tax Department and were providing various services. On 28.12.2009 appellant entered into an agreement with M/s Bajaj Hindustan Ltd. (which was latter on assigned to M/s Bajaj Energy Pvt. Ltd.) The agreements were for setting up of 5 Thermal Power Plants of 90MW each situated at 5 different locations including 4 locations associated with present 4 appeals. As per Clause 2.2.1 of the said contract dated 28.12.2009 read with schedule 3 of the said contract. The component of procurement and supply of equipments was priced at Rs.260.00 crores, the component for Civil Construction Work was priced at Rs.78.00 crores, the component of Erection, Commissioning, Installation and other services was priced at Rs.25.20 crores and the last component was priced at Rs.16.38 crores which delth with project monitoring, supervision, management and other service charges. The appellants availed Cenvat credit in respect of services rendered by sub-contractors. Further, the appellants filed ST-3 returns regularly by separately mentioning the value, tax liability and mode of payment in respect of aforesaid components. On 17.11.2011, a team of Central Excise Officers visited appellant’s premises at Khambharkhera Power Plant and scrutinized Books of Account and other records and undertook further inquiry. On the basis of said inquiry, 4 show cause notices were issued which were on contest adjudicated and said adjudications resulting into filing of present 4 appeals. For the sake of convenience, the details are as follows:-

No.Service Tax Appeal Nos.Impugned Order No.Unit atPeriod of disputeDate of SCNDemand as per SCN (In Rs.)Demand confirmed through Impugned order (In Rs.)
1.70683/2016100Utraula2010-11 to 2012-1316/02/20155,04,48,395/-63,53,521/-
2.70684/201699Khambarkhera2010-11 to 2011-1207/05/20144,23,51,595/-1,26,25,532/-
3.70685/201698Maqsoodapur2010-11 to 2011-1207/05/20143,62,52,553/-1,06,38,201/-
4.70686/2016101Kunderkhi2010-11 to 2012-1316/02/20154,21,69,752/-47,04,352/-

It was alleged in the said show cause notices that appellant did not choose for payment of service tax under works contract composition scheme and therefore, the value itself appeared to be proper by resorting to Rule 2A of Service Tax (Determination of Value) Rules, 2006. It was alleged in the show cause notice that appellant had vivisected service portion of the works contract into 4 subheads and paid service tax treating each subhead as separate service and the same did not appear to be in accordance with the provisions of law. It was alleged in the said show cause notice that the entire contract dated 28.12.2009 was properly classifiable as ‘Works Contract Service’. Therefore, above stated show cause notices were issued for above stated period by invoking provisions of Sub-section (1) of Section 73 of Finance Act, 1994 by invoking the extended period of limitation.

3. The appellant submitted before the Original Authority as follows:-

a) In view of schedule 3 of the contract dated 28.12.2009 there were separate payment for the separate components and therefore, the separate components can be classified separately and applicable service tax can be paid on the same in accordance with the provisions of law.

b) Just because 5 components are indented in one instrument the 5 independent components cannot become one contract.

c) Classification adopted and valuation resorted to by the appellant for filing of ST-3 returns was appropriated and there was no question raised on the filing of ST-3 returns during the normal period of limitation.

d) Under composition scheme no procedure has been prescribed for opting of the scheme other than reflection of option for the scheme in the service tax returns and in view of service tax return filed allegation in the show cause notice that the appellant did not opt for composition scheme, are not tenable.

e) The calculation of service tax payable stated in the show cause notice is incorrect.

f) Extended period of limitation is not invokable in view of the filing of ST-3 returns periodically.

They further submitted that relied upon document in para-11 of the show cause notice states to be ST-3 return filed for the relevant period, the returns were filed in time and therefore, extended period of limitation is not available to the Department, since burden is cost upon revenue to prove suppression etc.

4. The Original Adjudicating Authority has confirmed part of the demand and dropped part of the demand as stated in the table in the aforesaid para. Aggrieved by the said orders, appellant is before this Tribunal in the above stated 4 appeals.

5. Heard Shri Piyush Kumar learned Advocate along with Shri Jitendra Singh, Advocate appearing on behalf of the appellant. They have submitted that through the impugned order, Original Adjudicating Authority has held in para no.25 of the Order-in-Original No.100 that conduct of the party in vivisecting the contract for discharging service tax in so far as 3 services are concern, cannot be faulted. Further, in para-26 of the same order the Original Adjudicating Authority has held that appellant had correctly paid service tax in so far as the same relates to Consulting Engineering Service, Erection Commissioning and Installation Service and Business Auxiliary Service and the dispute is related with payment of service tax in respect of Civil Construction Service. The learned counsels have submitted that after stating so he has in para no.30 of the said order taken into consideration entire contract value in respect of all the 4 components to calculate service tax and confirmed the demands stated in the aforesaid table. They have submitted that thus there is contradiction in the finding of the order and finding in the different paragraphs of the order. They further submitted that they had filed ST-3 returns separately showing all particulars relating to services rendered by the appellant discharging service tax liability @ 10% in respect of Consulting Engineering Service, Erection Commissioning and Installation Service and Business Auxiliary Service and in respect of Civil Construction Service, appellant had paid service tax @ 4% by adopting composition scheme. They further submitted that there are no allegations in the show cause notice nor it was held in the Order-in-Original that any of the particulars entered in relevant ST-3 returns, was wrong. They further submitted that since all the particulars entered in the ST-3 returns were found to be appropriated, there was no suppression nor any misstatement nor any intention to evade payment of duty and therefore, extended period was not available to revenue. They further submitted for invoking extended period of limitation essentially pre-requisite is existence of fraud or collusion or willful misstatement of facts or contravention of any provisions of Service Tax Law with an intention to evade service tax which essentially means a positive act of contumacious conduct or willful defiance of law with an intention to evade tax and that in the facts and circumstances of the present appeals, there were no evidence to suggest that appellant indulged in any contumacious conduct or willful defiance of statutory provisions to evade tax and hence invocation of extended period of limitation and to confirm demand for extended period is not tenable in law. Further, they have relied upon following case laws in support of their submissions:-

i) Continental Foundation Joint Venture Sholding Nathpa Vs Commissioner of Central Excise, Chandigarh-I, 2007 (216) ELT 0177 (SC) = 2007-TIOL-152-SC-CX.

ii) Commissioner of Central Excise, Kolkata VI Vs ITC Ltd. 2013 (291) ELT 377 = 2013-TIOL-1135-CESTAT-KOL – No suppression if Returns filed.

iii) M/s Uniworth Textiles Ltd. Vs Commissioner of Central Excise, Raiput – 2013-TIOL-13-SC-CUS mere non-payment of duty is not equal to collusion or willful misstatement or suppression of facts.

iv) Gammon Far Chems Ltd., Vs Collector of Central Excise, Bangalore 1994 (71) ELT 59 (Tribunal)

v) Gujarat State Petronet Ltd., Vs Commissioner of Customs & Central Excise Ahmedabad 2013 (32) STR 1994 510 (Tri-Ahmd.) = 2013-TIOL-2300-CESTAT-AHM

vi) Apex Electrical Pvt. Ltd., 1992 (61) ELT 413 (Guj).

6. Learned A.R. appearing for the revenue has supported the impugned orders.

7. Having considered the submissions made by both the sides and on perusal of record, we note that the Original Adjudicating Authority has held in para no.26 and similar such paras in other Orders-in-Original that the appellant had correctly paid service tax in so far as the same relates to Consulting Engineering Service, Erection Commissioning and Installation Service and Business Auxiliary Service. Inspite of that in the subsequent paragraph, he has taken into consideration the entire amount received by the appellant from balance sheet for various years and deducted the value of the material used and from remaining portion calculated service at applicable rate and confirmed the demand. While doing so, he has not given any finding on the extended period of limitation as applicable in the present case particularly, when the appellant had raised the said issue before him and relied upon various case laws. We find that the reliance for issuance of show cause notice is placed on ST-3 returns filed by the appellant. From the show cause notice and the Order-in-Original, we could not come across any contention to establish that there was any observation that any information submitted in the said ST-3 return was not proper. We note that Hon’ble Supreme Court of India in the above stated case of M/s Uniworth Textiles Ltd. has held that the positive action with a negative intention of wilful and deliberate default is a mandatory prerequisite to conclude wilful misstatement or suppression in order to invoke extended period. We further note that this Tribunal in the above stated case of Gujarat State Petronet Ltd. by relying on the ruling of Hon’ble Supreme Court in the case of Collector of Central Excise Versus Chemphar Drugs & Liniments reported at 1989 (40) ELT 276 (SC) = 2002-TIOL-266-SC-CXhas held that there should be deliberate default of information which are required to be disclosed to invoke extended period of limitation. From the proceedings, we note that ST-3 returns were regularly filed and there was no observations made in the proceedings that information was lacking in the said ST-3 returns and there was no observation that the incomplete or incorrect information was submitted through ST-3 returns. Therefore, the extended period of limitation was not available to revenue. It can be very clearly seen from the table in the aforesaid paragraph that the show cause notices were issued by invoking the extended period of limitation. We, therefore, without going into merit of the case hold that all the above stated 4 show cause notices were not sustainable. Since, the extended period of limitation was not available to revenue, we set aside all the 4 impugned Orders-in-Original and allow all the four appeals.

8. All the four appeals are disposed of accordingly.

(Pronounced in open court on 16.05.2019)

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