The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in the case of Smt. Teena Gupta Versus Commissioner, Central Excise & Service Tax has held that the limitation period cannot be invoked when income is reflected in the balance sheet & profit and loss account.
The bench of Justice Dilip Gupta (President) And Hemambika R. Priya (Technical Member) has observed that the balance sheet and profit and loss account has been held to be public documents by various decisions and it stands concluded that when the income arising from various activities stand reflected in the said public documents, it cannot be said that there was any suppression or misstatement on the part of the assessee so as to invoke the longer period of limitation.
The appellant/assessee has challenged the order passed by the Commissioner (Appeals) upholding the order passed by the Joint Commissioner that confirms the demand of service tax upon the appellant with interest and penalty. The period involved in the appeal is from 2008-09 to 2011-12 and the show cause notice is dated 12/13.03.2013.
The show cause notice was issued to the appellant stating that service tax has been demanded under “rent-a-cab service”, “renting of immovable property” and luggage booking under “business support service”.
The appellant contended that the order deserves to be set aside for the sole reason that the show cause notice was issued beyond the period stipulated in the proviso to section 73(1) of the Finance Act 1994, as it stood at the relevant time. The entire demand has been made on the basis of profit and loss account and balance sheet which are public documents known to the department and thus, there has been no suppression of facts, much less with an intent to evade payment of service.
The proviso to section 73(1) of the Finance Act stipulates that where any service tax has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Chapter or the Rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax, the provisions of the said section shall have effect as if, for the word “one year”, the word “five years” has been substituted.
Section 73 (1) of the Finance Act does not mention that suppression of facts has to be “wilful‟ since “wilful‟ precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression “wilful” before “suppression of facts” under section 73(1) of the Finance Act, suppression of facts has still to be willful and with an intent to evade payment of service tax.
The Supreme Court and the Delhi High Court have held that suppression of facts has to be “wilful‟ and there should also be an intent to evade payment of service tax.
The CESTAT held that even if it is assumed that facts were suppressed by the appellant then too no reason has been assigned in the orders passed by the Joint Commissioner or the Commissioner (Appeals) as to why such suppression was with an intent to evade payment of service tax. This apart, service tax has been demanded on the basis of profit and loss account and balance sheet, which are public documents which the department could have ascertained.
The tribunal held that the order passed by the Commissioner (Appeals), therefore, deserves to be set aside on the sole ground that the extended period of limitation contemplated under the proviso to section 73 (1) of the Finance Act could not have been invoked in the facts and circumstances of the case.
Read More: Flexibility Can’t Be Equated With Department’s Lethargy: CESTAT
Case Details
Case Title: Smt. Teena Gupta Versus Commissioner, Central Excise & Service Tax
Case No.: Service Tax Appeal No. 50542 Of 2017
Date: 04.12.2024
Counsel For Appellant: Ankur Upadhyay
Counsel For Respondent: Harshvardhan
