The Chhattisgarh High Court has held that mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty.
The bench upheld the order of the Tribunal remitting back the matter to the Commissioner to calculate the service tax liability for the period prescribed under Section 73(1) of the Income Tax Act without invoking the proviso that seeks to extend the period of limitation.
Section 71A, along with Section 73 of the Act, which touches upon recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded, provided thirty months of time, which was earlier one year. It was made to eighteen months and subsequently was made to thirty months.
The court, while dismissing the department’s appeal, has held that when the Revenue invokes the extended period of limitation under Section 11-A, the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement.
Facts
An appeal was preferred by the respondent/assessee, Mammen Engineering Works, before the Tribunal against the order passed by the Commissioner, Central Excise & Customs, Raipur, by which the demand for service was confirmed and the interest and penalty were further levied.
The respondent is a subcontractor, who had received payment of Rs. 19,30,94,411 for fabrication, erection, and commissioning work of the main contractors. They did not pay the service tax on the plea that it was required to be paid by the main contractor, and the main contractor had also discharged the tax liability and had given a certificate to the respondent.
During the course of the audit, it came to light that in the service tax return ST-3, the respondent has not shown or paid the service tax. Therefore, since the liability to pay the service tax was on the respondent-assessee according to Section 71A and the circular issued by the Central Government, the assessee was duty-bound to show the payment of service tax or its entry in the return.
The show cause notice was issued that for the financial years 2007-08, 2008-09, 2009-10, and 2010-11 and the trial balance sheet for the financial year 2011-12, the assessee as a subcontractor received the payment from the main contractor but had not paid the service tax. As per the circular dated 4/1/2008 issued by the Central Board of Excise and Customs, the extended period of limitation was invoked.
The assessee replied to the said show cause notice stating that the main contractors had already made payment of service tax; therefore, they did not collect the service tax from the main contractor, and the levy of tax was not justified. Had there been payment of service tax, there would have been double taxation, and the work order also contains a stipulation that the main contractor would bear the service tax payment. The assessee has paid the service tax regularly, but for the works under the subcontract, it had not paid the service tax for a bona fide reason that the issue was under consideration in a reference matter about the liability of payment of service tax coupled with the fact that it was actually deposited by the main contractor.
The Commissioner held it against the asseessee, which was challenged before the Tribunal, and the Tribunal has passed the order by remitting back the case to the Commissioner to recalculate for the period prescribed under Section 73(1) of the Income Tax Act without invoking the proviso that seeks to extend the period of limitation.
The department contended that, as per Section 71A, paying service tax is mandatory, and Section 73, which is akin to Section 11A of the Central Excise Act, 1944, extends the period of limitation in case of fraud, collusion, willful misstatement, or suppression of facts in contravention of any provisions. When the statute mandates to file a return, which was embodied in the circular of the Department, while giving an ST-3 return, which is a return to be filed by the respondent, the respondent should have disclosed the payment of service tax, and having not done so, there has been willful defiance. They could not escape the liability of an extended period of limitation under Section 73.
Case Information
Counsel For Appellant: A.S. Kachhawaha
Counsel For Respondent: Anurag Tripathi
Case Title: The Principal Commissioner Versus Mammen Engineering Works
Case No.: TAXC No.3 of 2020
