P. Anjani Kumar ORDER
P. Anjani Kumar, Member (T)
1. Brief issue to be decided in the instant case is as to whether the appellants are liable to pay penalty under Section 78 when the service tax was paid along with interest before the issuance of show-cause notice.
2. Brief facts of the case are that the appellants have registered themselves under Service Tax and GST as applicable during the relevant periods for payment of tax; on the conduct of audit of the accounts of the appellants during July 2019 to October 2019, the appellants have paid the service tax along with interest as pointed out by the audit; however, after lapse of around eight months, Revenue issued a show-cause notice dated 25.06.2020 to the appellants demanding service tax of Rs.65,34,464/- along with interest of Rs.44,20,422/-; Commissioner vide Order-in-Original dated 29.01.2021 confirmed the demands with interest and appropriated the amounts already paid by the appellants; he further imposed penalty of Rs.10,000/- under Section 77 and penalty of Rs.9,80,170/- under Section 78 of the Finance Act, 1994. Hence, this appeal.
3. Shri Krishna Rao, learned Counsel for the appellant, submits that the appellant has submitted detailed reply dated 29.09.2020 to the Commissioner stating inter alia that SCN is time-barred and extended period in terms of proviso to Section 73(1) of the Act is not invocable and that as per Section 73(3), SCN cannot be issued in respect of service tax and interest already paid by the appellant before the issuance of SCN. He submits that there was no suppression of fact with intent to evade payment of duty on the part of the appellant and no evidence to invoke extended period on that count has been adduced by the Department. Learned Counsel further submits that the period involved in the case is from April 2014 to June 2017; for some period, the SCN is beyond for years even with extended period; last date for issuance of SCN for the normal period also expired on 14.02.2020.
4. Learned Counsel submits that the impugned order has been passed with a pre-meditated mind without appreciating the facts of the case; non-consideration of points raised in the reply to the show- cause notice amounts to violation of principles of natural justice. He relies on the following cases:
• Micro Super Cables Pvt. Ltd. - MANU/DE/3258/2013 : 2013:DHC:4752-DB : 2013 (298) ELT 161 (Del.)
• Mediways Pharmaceuticals - MANU/CE/8559/2007 : 2007 (215) ELT 541 (Tri. Del.)
• Vasavadatta Cement - MANU/CB/7210/2006 : 2006 (206) ELT 592 (Tri. Bangalore)
• AI Enterprises-MANU/CC/0698/2001 : 2002 (147) ELT 642 (Tri. Chennai)
5. Learned Counsel further submits that they have maintained all the statutory records; they have submitted details/ documents as and when called for by the audit; the data required for issuance of show- cause notice was taken out from their statutory records only; under the circumstances, it cannot be alleged that the appellant has suppressed facts with intent to evade payment of duty. He relies on the following cases:
• Nizam Sugar Factory - MANU/SC/8820/2006 : 2006 (197) ELT 465 (SC);
• Reliance Life Insurance Co. Ltd. - MANU/CM/0829/2017 : 2018 (363) ELT 1050 (Tri. Mumbai)
• Subhash Khandelwal & Sons - MANU/CE/0311/2011 : 2011 (24) STR 461 (Tri. Del.).
• Bright Marketing Company - MANU/TN/0900/2020 : 2020-TIOL-336-HC-MAD- ST
• Adecco Flexione Workforce Solutions Ltd. - MANU/KA/2372/2011 : 2012 (26) STR 3 (Kar.)
• C.C.I. Logistics Ltd. - MANU/CK/0018/2021 : 2021 (54) GSTL 27 (Tri. Kolkata)
• Ernst & Young Pvt. Ltd. - MANU/CE/0510/2019 : 2020 (35) GSTL 202 (Tri. Del.)
• YCH Logistics India Pvt. Ltd. - MANU/CB/0088/2020 : 2020-TIOL-605- CESTAT-BANG
• DLF Project Limited - MANU/CJ/0069/2019 : 2020 (38) GSTL 56 (Tri. Chan.)
• Dixit Security & Investigation P. Ltd. - MANU/CS/0011/2011 : 2011 (22) STR 448 (Tri. Ahmd.)
• GET & D India Limited - MANU/TN/9682/2019 : 2020 (35) GSTL 89 (Mad.)
• Wipro Limited - MANU/CB/0216/2018 : 2018 (363) ELT 1111 (Tri. LB)
• Chemphar Drugs & Liniments - MANU/SC/0112/1989 : 1989:INSC:59 : 1989 (40) ELT 276 (SC)
• M/s. G.D. Goenka Pvt. Ltd.-2023-TIOL-782-CESTAT- DEL
6. Ms. Shivani, learned Authorized Representative for the Department, reiterates the findings of the impugned order.
7. Heard both sides and perused the records of the case. The appellant submits that there was no suppression of facts on their side with intent to evade payment of duty and for that reason, the extended period cannot be invoked. On going through the impugned order and the show-cause notice, I find that except for stating that the show-cause notice has been issued only after conduct of audit and that the appellants have suppressed the material facts, no evidence has been put forth in the show-cause notice or in the impugned order to show that there has been a positive act of suppression on the part of the appellants to evade payment of duty. I find that Tribunal has been consistent in holding that extended period cannot be invoked unless a positive act on the part of the assessee is evidenced showing the intent to evade payment of duty. I also find that Tribunal has been taking a consistent view that a mere non-payment of service tax and non-filing of Returns would not be a sufficient reason to extend the period of limitation. I find that Hon'ble Karnataka High Court in the case of Adecco Flexione Workforce Solutions Ltd. (supra) held that:
"3. Unfortunately the assessing authority as well as the appellate authority seem to think. If an assessee does not pay the tax within the stipulated time and regularly pays tax after the due date with interest. It is something which is not pardonable in law. Though the law does not say so, authorities working under the law seem to think otherwise and thus they are wasting that valuable time in proceeding against persons who are paying service tax with interest promptly. They are paid salary to act in accordance with law and to initiate proceedings against defaulters who have not paid service tax and interest in spite of service of notice calling upon them to make payment and certainly not to harass and initiate proceedings against persons who are paying tax with interest for delayed payment. It is high time, the authorities will change their attitude towards these tax payers, understanding the object with which this enactment is passed and also keep in mind the express provision as contained in sub-sec. (3) of Sec. 73. The Parliament has expressly stated that against persons who have paid tax with interest, no notice shall be served. If notices are issued contrary to the said Section, the person to be punished is the person who has issued notice and not the person to whom it is issued. We take that, in ignorance of law, the authorities are indulging in the extravaganza and wasting their precious time and also the time of the Tribunal and this Court. It is high time that the authorities shall issue appropriate directions to see that such tax payers are not harassed. If such instances are noticed by this Court hereafter, certainly it will be a case for taking proper action against those law breakers."
8. I find that Principal Bench of the Tribunal in the case of M/s. G.D. Goenka Pvt. Ltd (supra) held as follows:
"15. Another reason given in the SCN for invoking extended period of limitation was that the appellant had deposited the disputed amount of service tax during audit but later disputed it which shows the appellant's intent to wilfully and deliberately suppress the facts. This reasoning of the Revenue cannot be accepted because there is nothing in the law which requires the assessee to accept the views of the audit or of the Revenue. There is nothing in the law by which an inference of intent to evade can be drawn if the assessee does not agree with the audit. It also does not matter if the assessee deposited the disputed amount as service tax during audit and later disputed it. Often, during audit or investigation, the assessee deposits some or all of the disputed amounts and later, on consideration or after seeking legal opinion, disputes the liability and seeks a notice or an adjudication order. This does not prove any intent to evade or deliberate or wilful suppression of facts.
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.
17. The argument that the appellant had not disclosed in its returns that it was availing and using ineligible CENVAT credit also deserves to be rejected. The appellant cannot be faulted for not disclosing anything which it is not required to disclose. Form ST-3 in which the appellant is required to file the returns does not require details of the invoices or inputs or input services on which it availed CENVAT credit and the appellant is not required to and hence did not provide the details of the CENVAT Credit taken. It also needs to be pointed out that the Returns are filed online and therefore, it is also not possible to provide any details which are not part of the returns. If the format of ST-3 Returns is deficient in design and does not seek the details which the assessing officers may require to scrutinise them, the appellant cannot be faulted because as an assessee, the appellant neither makes the Rules nor designs the format of the Returns. So long as the assessee files the returns in the formats honestly as per its self-assessment, its obligation is discharged.
18. Another ground for invoking extended period of limitation is that the appellant had not sought any clarification from the department. We find that there is neither any provision in the law nor any obligation on the assessee to seek any clarification. It was held by the High Court of Delhi in paragraph 32 of Mahanagar Telephone Nigam Ltd. vs. Union of India & Ors.6 as follows:
"32. As noted above, the impugned show cause notice discloses that the respondents had faulted MTNL for not approaching the service tax authorities for clarification. The respondents have surmised that this would have been the normal course for any person acting with common prudence. However, it is apparent from the statements of various employees of MTNL that MTNL did not believe that the amount of compensation was chargeable to service tax and therefore, there was no requirement for seeking clarifications. Further, there is no provision in the Act which contemplates any procedure for seeking clarification from jurisdictional service tax authority. Clearly, the reasoning that MTNL ought to have approached the service tax authority for clarification is fallacious."
9. In view of the above, I am of the considered opinion that the impugned order is not sustainable under law and is liable to be set aside. Accordingly, I set aside the impugned order and allow the appeal with consequential relief, if any, as per law.
(Pronounced on 20/02/2024)
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