K N International Ltd. Vs. Commissioner of Central Excise, Customs& Service Tax - (Customs, Excise and Service Tax Appellate Tribunal) (30 Jan 2024)

Mere failure to pay duty without any collusion, fraud or willful misstatement not sufficient to invoke extended period of limitation

MANU/CN/0017/2024

Service Tax

The facts of the case are that the Appellant was engaged by Steel Works Construction Limited (HSCL) and Baghel Infrastructure Private Limited, Reliance Infrastructure Limited, SASAN & HINDALCO etc. for construction related services / works contract services in relation to construction of road, reservoir etc. The Revenue on specific information, undertook scrutiny of records of the Appellant and found short payment of service tax on comparison of amount shown in their ST-3 returns with that in Profit & Loss Account in the respective period from 2009-10 to 2012-13. The Revenue, therefore, demanded service tax of Rs.3,43,97,544 on differential value for the period from 2009-10 to 2012-13. The Appellant contested the Show-Cause-Notice but the demand proposed in the Show-Cause-Notice was confirmed. Being aggrieved, the Appellant has filed the present appeal before the Tribunal.

As regards liability of tax payment by the Appellant where their main contractors have already paid the tax on their behalf, present Tribunal find that, this remained a vexed issue for the assesses for over the period of time. Hence, this was a legal dispute which involved interpretation of law and mala-fide intention or suppression with intent to evade payment of service tax cannot be attributed to the Appellant.

As regards the issue of applicability of extended period of limitation, the Appellant have been regularly filing their ST-3 returns and their records have been regularly audited by the Audit Wing of the Department and they have been complying with audit objection. They have also submitted audit reports and compliance thereof. Further, Adjudicating Authority has not made any observation as to how suppression of facts is invokable when regular Audit of records have been conducted by the Revenue.

The Hon'ble Supreme Court has laid down guidelines for invoking extended period of limitation. The Court has observed that, extended period of 5 years is not invokable, when there is no willful misstatement or suppression involved. Mere failure to pay duty without any collusion, fraud or willful misstatement not sufficient to invoke extended period of limitation.

Further the various Benches of the Tribunal in number of cases from time to time have been unanimous in their findings that Revenue should not invoke extended period of limitation when records of assessee have been audited by the Department. Thus, matter was in the knowledge of the department in 2010 when the first audit was conducted and thereafter regular audit was conducted every year, but the show-cause-notice was issued in 16th October, 2014 without carrying out any investigation and without adducing any new corroborative evidence for invoking any suppression in the show-cause-notice as service tax was also demanded on the exempted services valued at Rs.11,67,04,375 pertaining to construction of PMGSY roads.

The impugned order holding that the extended period has been correctly invoked, therefore, cannot be sustained and is set aside. Appeal allowed.

Tags : SCN DEMAND CONFIRMATION