Extended Time Limit under proviso to Section 73(1) of Finance Act can be invoked, if there is positive act of Assessee to conceal anything from Department: CESTAT

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata held that an Extended time limit under proviso to Section 73(1) of the Finance Act can be invoked, if there is a positive act of assessee to conceal anything from the department.

M/s Bhaskar Steel and Ferro Alloy Pvt Ltd, the appellants or the appellant company having their registered office in Kolkata are engaged in the manufacture of Sponge Iron and M. S. billets for which they were having central excise registration during the relevant period. They were also duly registered with service tax.

Based on the balance sheets filed by the appellants before the income tax authorities for the financial years 2013-14 and 2014-15 the department came to the view that entries shown under the head Compensation or Short-term capital gain for the two years were nothing but consideration received for rendering service and was, therefore, liable to service tax.

Show cause notice dated 28.09.2018 was, accordingly, issued invoking the extended period and demanding Rs.3,09,55,655/- from the appellants along with interest. The penalty was proposed for the appellant company as well as the Director of the company.

the Principal Commissioner of GST and CX, rejected the submissions of the appellants confirmed the full demand along with interest and imposed an equivalent penalty plus Rs 10,000 on the company and a penalty of Rs 1 lakh on the Director of the company.

The division bench consisting of P K Chaudhary, Judicial Member, and P Anjani Kumar, Technical Member observed that “Show cause notice is dated 28.09.2018 whereas the period involved is 01.04.2013 to 31.03.2015. The demand has been raised by invoking the extended time limit under the proviso to section 73(1) of the Finance Act, 1994. The only ground for invoking the extended period is that the above amounts were not reflected in the Service Tax returns filed by the appellants and that had the DGGI not intervened and unearthed the facts the activities of the appellants would not have come to surface.”

The Tribunal also noted that “Courts have consistently held that the extended time limit can be invoked only if there is a positive act on the part of an assessee to conceal anything from the department. There must be a deliberate attempt to suppress information for invoking the extended period. We, therefore, hold that no ground has been made out to justify invoking the extended time limit.”

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