Extended Period of Limitation can be invoked only on wilful suppression to evade the payment of Service Tax: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad comprising Justice Dilip Gupta, president and Mr Raju, technical member has held that an extended period of limitation can be invoked only on wilful suppression to evade payment of service tax.   

The appellant engaged in providing business auxiliary service in terms of section 65(105) (zzb) of the Finance Act, 19942. The appellant had not paid service tax on several items of work though these were part of the service rendered by the appellant under business auxiliary service.  A show-cause notice was issued to the appellant demanding service tax by invoking the extended period of limitation as contemplated under section 73(1) of the Finance Act.

It was settled law that where any service tax has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the service tax which has not been levied or paid, requiring him to show cause why he should not pay the amount specified in the notice   

 It was evident from section 73(1) of the Act states that any service tax has not been levied or paid by reason of fraud or collusion or wilful suppression or suppression of facts or contravention of any of the provisions of the Chapter or the rules made 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” had been substituted.    

 It was evident that even if an assessee has suppressed facts, the extended period of limitation can be evoked only when “suppression‟ is shown to be wilful with intent to evade the payment of service tax.

The respondent contended that the allegation of suppression with intent is not valid as the same was in regard to levy of penalty under sections 76 and 78 of the Finance Act and not section 73(1) of the Finance Act.

The Tribunal observed that the show-cause notice failed to mention that suppression was with an intention to evade payment of service tax. The Tribunal set aside the penalty and allowed the appeal. Ms Rinki Arora appeared for the appellant and Shri S. Shekhar appeared for the revenue.  

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