The Principal Commissioner of GST & Central Excise, Chennai Versus C. Kamalakannan
Service Tax
2018 (9) TMI 262 – MADRAS HIGH COURT – 2018 (18) G. S. T. L. 589 (Mad.)
MADRAS HIGH COURT – HC
Dated:- 23-8-2018
Civil Miscellaneous Appeal No.35 of 2018 and CMP.No.441 of 2018
Service Tax
T. S. Sivagnanam And V. Bhavani Subbaroyan, JJ.
For the Appellant : Mr.T.L.Thirumalaisamy, SPC
For the Respondent : Mr.N.V.Balaji
ORDER
Judgment was delivered by T. S. Sivagnanam, J.
This appeal filed by the Revenue is directed against the order passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai in Appeal No.ST/41802/2016-SM in Final Order No.40715 of 2017 dated 18.5.2017.
2. The above appeal is admitted on the following substantial question of law :
“In the facts and circumstances of the case, in the absence of documentary evidence to show that the assessee had acted in bona fide belief and in the light of evide
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d charges and value added tax on them. However, the distributors did not raise any separate sale document in respect of subsequent sales made by them and did not charge sales tax/VAT on such sales and thus, they acted as a commission agent on behalf of the principal by promoting their products.
5. On scrutiny of the records furnished by the assessee, the Original Authority stated that the assessee is not registered with the Department till 17.7.2012 whereas he received commission charges for the services provided under the category 'business auxiliary service' from 2007-08 to 2011-12. However, the assessee did not disclose the actual amount received as commission as reflected in his balance sheets in the ST-3 returns filed on 24.8.2012 for the period from 2007-08 to 2011-12.
6. It appears that certain clarifications were obtained by the assessee and a statement was also recorded and ultimately, the assessee was called upon to show cause as to why the service tax along with ce
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Section 73(3) of the Finance Act, 1994 since there is no fraud or suppression of facts, etc., and the entire service tax along with interest was paid before the Department and the Department had any clue that the appellant was providing taxable service and before issuance of the said show cause notice and that therefore, they were covered under Section 73(3) of the Finance Act, 1994. Apart from the above contention, the assessee also advanced other contention on facts and relied upon certain judicial precedents.
9. The Tribunal, vide final order dated 18.5.2017, disposed of the appeal in favour of the assessee by setting aside the order passed by the Adjudicating Authority as well as the First Appellate Authority and held that the demand beyond the period of limitation would not be sustainable. Hence, the Revenue is on appeal before us as against order of the Tribunal.
10. We have heard Mr.T.L.Thirumalaisamy, learned Senior Panel Counsel appearing for the appellant and Mr.N.V.Balaji,
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taxable services and certain Appellate Authorities hold otherwise, the Hon'ble Supreme Court, in the case of Continental Foundation Jt. Venture Vs. CCE, Chandigarh-I [reported in (2007) 216 ELT 177] considered the expressions used under the Proviso to Section 11A of the Central Excise Act, 1944 and held as follows:
“10. The expression 'suppression” has been used in the Proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or “collusion” and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppr
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rticular stand which rules out application of Section 11A of the Act.
12. As far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word 'wilful', preceding the words “mis-statement or suppression of facts” which means with intent to evade duty. The next set of words 'contravention of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intent to evade payment of duty.' Therefore, there cannot be suppression or mis-statement of fact, which is not wilful and yet constitute a permissible ground for the purpose of the Proviso to Section 11A. Mis-statement of fact must be wilful.
13. That being so, the adjudicating authorities were not justified in raising the demand and CEGAT was not justified in dismissing the appeals.
14. On the ground of adjudica
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ger period under the Proviso to Section 11A of the Central Excise Act, 1944 cannot be invoked.
15. The operative portion of the order in the decision in Charanjeet Singh Khanuja reads as follows :
“Another plea raised in these appeals is regarding limitation. It is the contention of the assessees that there was absolutely no suppression or mis-statement of facts or deliberate contravention of the provisions of the Finance Act, 1994 or of the Rules made thereunder with intent to evade payment of service tax. The Department's contention, on the other hand, is that the assessees neither obtained service tax registration nor did they declare their activities to the jurisdictional Service Tax Authorities nor did they file ST-3 return and, therefore, they are guilty of suppression of relevant facts and deliberate violation of the provisions of the Finance Act, 1994 and of the Rules made thereunder with intent to evade payment of tax. On considering the rival submissions on this point,
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oundation Joint Venture Vs. CCE [(2007) Taxmann.com 532], when there is scope for doubt in the mind of an assessee on a particular issue, the longer limitation period under Proviso to Section 11A(1) cannot be invoked and in our view, the ratio of this judgment of the Apex Court is applicable to the facts of these cases. Therefore, the longer limitation period of five years under Proviso to Section 73(1) of the Finance Act, 1994 would not be invocable and duty can be demanded for normal limitation period of one year from the relevant date.”
16. In the impugned order, the Tribunal had followed the decision in Charanjeet Singh Khanuja, which has attained finality. The Revenue does not dispute the fact that there were two views on the issue within the Department itself and this was considered by the New Delhi Bench of the Tribunal in a batch of appeals, which consisted of both appeals filed by the Department against the orders passed by the Commissioner (Appeals) as well as appeals filed
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