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. 'Extended period of limitation' is one of the very important aspects which is to be seen while contesting a case or contesting/disputing a demand raised on the assessee is. It is necessary to look in to the fact whether the demand raised against the assessee is falling under the normal period of limitation or extended period of limitation. Mere non-payment of tax and omission on the part of the assessee, does not amount to any 'suppression', 'fraud' or 'wilful misstatement' on the part 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. Similarly, it cannot be invoked where the assessee is duly co-operating with the department and provided all the information as and when sought by the department. Also, no suppression can be levelled against the assessee, when it is disclosing the whole information about its activities in statutory records like 'Balance Sheet and its books of records.' The department also cannot allege suppression against the assessee when the facts about its activities are already in the knowledge of the department. In the Similar way, the intent of the assessee needs to be looked in to and if the non-payment of tax is with a malafide intent, the allegation of suppression would sustain. However, if the assessee due to any factor, is under a bonafide belief that the services provided by him or activities carried on by him are not exigible to Service Tax, in that case the extended period of limitation cannot be invoked. The belief of the assessee is bonafide or there is any malafide, has to be seen from facts and circumstances of each case. If the department is not able to establish 'Suppression', 'fraud' with intent to evade payment of tax or malafide intent on behalf of the assessee, in that case the demand falling under the normal period can only be confirmed and rest of the demand is liable to be dropped. However, if the whole demand is made out beyond the period of limitation and no part of the demand is falling under the normal period of limitation, the whole demand raised against the assessee would be time-barred and liable to be dropped.
Our team handled a matter before the Hon'ble CESTAT Chandigarh, wherein the demand against the assessee/appellant was confirmed under the category of 'Supply of tangible goods.' The assessee/appellant being owner of the trucks, was providing trucks on hire basis to various logistic services for transportation of goods from one place to another and received the remuneration on kilometre basis. For the same, the appellant entered into various agreements with the different parties and as per the agreements, the main service to be provided by the appellant is transportation of goods on behalf of the service recipient from one place to another for which appellant is being paid on kilometre basis and the appellant did not issue any Goods Receipt (GR) for transportation of goods. The view of the department was the activity carried on by the appellant would fall under the category of 'Supply of Tangible Goods'. Disputing the demand, it was argued by our team on the behalf of the Appellant that the appellant would not fall under the category of 'supply of tangible goods' services as the appellant is providing truck to various logistic services provided on kilometre basis and the drivers of the vehicles carry builty raised by the logistic service provider and no copy of builty remains with the appellant. The trucks are not provided to the courier companies to ply absolutely at their respective disposal and there is no contract for providing transportation services using the trucks owned by the appellant. In alternate, it was submitted that if the service has to be taxed, it can be taxed under 'Goods Transport Agency' only. However, as the appellant is not issuing any transportation receipt, so the activity would not be taxable even under 'Goods Transport Agency.' For the period after the introduction of negative list, it was submitted that the activity of the appellant is not taxable in terms of Section 66D, wherein it has been specified that service by way of transportation of goods by road except service of goods transport agency or courier agency, which means that they are not liable to pay Service Tax. Lastly, relying on the decision of Birla Ready Mix [2013 (30) S.T.R. 99 (Tri. - Delhi)] and Notification No. 29/2008-S.T., dated 26-6-2008, it was submitted that the impugned order is liable to be set aside and the whole demand is barred by limitation. On the behalf of Revenue, the findings of the impugned order were supported.
The Hon'ble Bench after considering the facts of the case and submissions made from the both sides, found that on going through the definition in terms of Section 65(105)(zzzzj) of the Finance Act, 1994, on merits, held that the Appellant would be liable to pay Service Tax under the category of 'Supply of Tangible Goods'. However, on limitation, it was held that the appellant was under a bona fide belief that they were engaged in the activity of transportation of goods on behalf of the service recipient and the said service is not taxable in the hands of the appellant. The said understanding of the appellant has been evidenced by various agreements between the appellant and the service recipient which clearly shows that the main activity of the appellant is transportation of goods on behalf of the service recipient.
With the above observations and findings, it was held by the Hon'ble Bench that since the appellant was under a bonafide belief, extended period would not be applicable and as the whole demand has been confirmed against the appellant invoking extended period of limitation, the whole demand is time-barred and consequently, no penalty would be imposable on the appellant. Thus, the impugned order was set aside and the appeal was allowed.
Case details — Sant Roadlines v. Commissioner of C. Ex. & S.T., Panchkula
Forum — CESTAT
Case No. — Final Order No. 60183/2020
Represented by — CA Atul Kumar Gupta