Section 73(1) of the Finance Act defines the situation when extended period would be invokable i.e., in case of 'suppression of fact'; 'fraud'; 'collusion' or 'wilful misstatement.' Section 11A of the Central Excise Act, is para materia to Section 73(1). It is quite clear that extended period of limitation can be invoked against the assessee only in the case, where the revenue is able to establish 'suppression'; 'wilful misstatement'; with intent to evade payment of tax on the behalf of the assessee. Further, extended period cannot be invoked in the case, where the assessee is properly filing its returns and disclosing the whole information in the returns. When the whole information is already available and the department is aware of the activities of the assessee through the information punched in the returns, suppression cannot be alleged against the assessee to invoke extended period of limitation. Further, the recording of the information in the books (statutory records) would also mean disclosure to the department/revenue being the information available in public domain and accessible by the revenue. So, in this case also the extended period cannot be invoked. Further, the extended period cannot be invoked in the case where there is a confusion with respect to the taxability of activity carried on by the assessee or the issue involved is an interpretational issue being subject of litigation before authorities at different level. Later, circulars were issued or decisions were rendered to clarify the taxability or correct interpretation, it can be said that the assessee has suppressed the facts and did not pay the tax willingly.
A matter was handled by our team before the Hon'ble CESAT Delhi, wherein multiple issues were involved and on being pointed out by the department, the appellant deposited the required Service Tax on few issues, however, on other issues filed the Appeal before the Hon'ble CESTAT. On behalf of the Appellant, the matter was argued mainly on limitation by our team and it was submitted that it was contended before the lower authorities also that under the facts and circumstances the extended period of limitation is not invokable, this ground was rejected by the authorities below. Further, the appellant has maintained proper books of accounts and have filed returns, though delayed by few days and therefore, under such circumstances, wilful mis-statement, suppression of facts, etc. is not available to Revenue. On behalf of the revenue, the findings of the impugned order were relied upon.
The Hon'ble Bench after considering the submissions from both the sides, observed that the appellant had provided service as intermediary to the service of receiver of the service in non-taxable territory. Accordingly, was advised that the receiver is in non-taxable territory and thus, they are not liable to pay tax. Though, the required tax was paid by the Appellant on point out by the department. With respect to issue of excess availment of abatement on the input GTA service, the appellant had admitted the error and paid the differential amount. With respect to utilization of CENVAT Credit for payment of Service Tax on GTA under RCM, it was observed that the appellant admittedly has paid the service tax on GTA by utilizing CENVAT Credit and have not taken CENVAT Credit of such payment of tax. Thus, the situation would be revenue neutral and any amount paid for period prior to 1st July, 2017 by way of service tax which is available to the assessee by way of the CENVAT Credit would be refundable as such credit cannot be taken on or after 1st July, 2017. Lastly, it was found by the Hon'ble Bench that the issues involved in the SCN are wholly interpretational in nature and the major part of the demand is in respect of GTA service, wherein the situation is revenue neutral. It was found that the only allegation in SCN for invocation of extended period of limitation is that afore-mentioned omissions came to light in the course of audit, but for which tax would have escaped. Therefore, it was found by the Hon'ble Bench that such allegations do not stand, as admittedly, the appellant deposited the tax and accepted the audit objection, prior to issue of SCN. Accordingly, I hold that extended period of limitation is not available to the Revenue for issue of SCN.
The Hon'ble Bench with above observations and findings, allowed the appeal with consequential benefit and set aside the impugned order.
Case details — Elan Professionals Appliances Pvt. Ltd. v. Commissioner (Appeal – II), CGST, Delhi
Forum — CESTAT, New Delhi
Case No. — Final Order No. 50576/2023 in ST/50461/2023
Represented by — Adv. Varun Gaba