Extended Period of Limitation cannot be Invoked unless there is Evidence of Fraud or Collusion or Wilful Misstatement: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that extended period of limitation cannot be invoked unless there is evidence of fraud or collusion or wilful misstatement.

This is the second round of litigation. Initially, the matter was decided by the Commissioner by Order and on appeal, this Tribunal, by Final Order, remanded the matter to the Commissioner to examine the matter both on merits and on limitation.

The appellant, M/s GD Goenka Private Limited, availed cenvat credit on various input services which had gone into the construction of the school building and used it to pay service tax on the franchisee service and renting of immovable property service. According to the Revenue, this credit is ineligible because the input services were used in constructing the school building to provide school education which is an exempted service.

The counsel for the appellant argued on the limitation and submitted that extended period of limitation under the proviso to section 73 (1) of the Finance Act, 1994 was invoked but none of the essential ingredients to invoke it viz., fraud or collusion or wilful misstatement or suppression of facts or violation of Act or Rules with an intent to evade payment of service tax were present in the case.

It was pointed out that but for the audit, the allegedly irregularly availed cenvat credit would not have come to light. It is incorrect to say that but for the audit, the alleged irregular availment of CENVAT credit would not have come to light. It is undisputed that the appellant has been self-assessing service tax and filing ST-3 Returns.

A Two-Member Bench comprising Justice Dilip Gupta, President and PV Subba Rao, Technical Member observed that “Extended period of limitation cannot be invoked unless there is evidence of fraud or collusion or wilful misstatement or suppression of facts or violation of the provisions of Act or Rules with an intent.”

The Bench noted that intentional and wilful suppression of facts cannot be presumed because (a) the appellant was operating under self-assessment or (b) because the appellant did not agree with the audit and claimed that CENVAT credit was admissible; or (c) because the appellant did not seek any clarification from the Revenue; or (d) because the officer did not conduct a detailed scrutiny of the Returns and the availment of CENVAT credit which is alleged to be inadmissible and was discovered only during audit.

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