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The Delhi Bench of Custom, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the burden of proving that the appellant/assessee had suppressed facts with an intent of service tax evasion was clearly upon the department.
The bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has observed that it was necessary for the department to illustrate any positive act on the part of the appellant. The investigation started in October 2012 and continued for a period of almost two years. The entire records, including the balance sheets were available with the department and no new facts came to the notice of the department when the show cause notice was issued. The department has failed to substantiate that the appellant suppressed material facts with an intention to evade payment of service tax.
Background
The Commissioner of Service Tax Audit confirmed the demand of service tax of Rs. 6,98,240 for the period 2012-13 to 2013-14 with interest. However, the demand for the extended period of limitation was dropped. The Commissioner also appropriated an amount of Rs. 11,00,000/- deposited by the appellant during investigation towards the liability for the period prior to 2012-13, which period was covered under the extended period of limitation.
The Commissioner also imposed penalty under sections 76 and 77 of the Finance Act 1994, but refrained from imposing penalty under section 78 of the Finance Act.
Service Tax Appeal has been filed by Vigasa Industries Private Limited to assail that part of the order that appropriates the amount of Rs. 11,00,000/- for the period prior to 2012-13.
Service Tax Appeal has been filed by the department to assail that part of the order dated 27.09.2016 that has dropped the demand for the extended period of limitation.
The issue raised was whether the amount of Rs. 11,00,000 deposited by the appellant under protest during investigation could have been appropriated by the Commissioner in the impugned order for the period covered by the extended period of limitation, which demand was dropped by the Commissioner for the reason that the extended period of limitation could not have been invoked. Another issue was whether the extended period of limitation under the proviso to section 73(1) of the Finance Act could have been invoked.
Arguments – Burden Of Proof Of Service Tax Evasion
The assessee contended that the Commissioner could not have appropriated the amount of Rs. 11,00,000 towards a claim which was barred by time. Payment of any amount under protest cannot be considered as acceptance of the liability. The amount deposited during investigation has to be treated as a ‘deposit’ and cannot be treated as ‘duty’ or ‘tax’.
The department contended that the Commissioner was justified in appropriating the amount of Rs. 11,00,000 towards the liability and that the extended period of limitation was correctly invoked.
Read More: PARLE’S ‘CHEESELINGS’ COVERED UNDER ‘NAMKEEN’, NO EXCISE DUTY PAYABLE: CESTAT
Conclusion
The tribunal held that no error in the order passed by the Commissioner and the extended period of limitation could not have been invoked.
FAQs
Who has the burden to prove Suppression Of Facts?
The burden of proving that the assessee had suppressed facts with an intent of service tax evasion was clearly upon the department.
On Whom burden of proof lies in Service Tax Evasion cases?
The burden of proving that the assessee had suppressed facts with an intent of service tax evasion was clearly upon the department.
Case Details
Case Title: Vigasa Industries Private Limited Versus The Commissioner of Service Tax, Audit-1, Delhi
Case No.: Service Tax Appeal No. 50010 of 2017
Date: 01.10.2024
Counsel For Appellant: S. K. Ray
Counsel For Respondent: Sriniwas Kotni
