Mere Non-Payment of Duty is not Equivalent to Collusion or Wilful Mis-Statement or Suppression of Facts: CESTAT quashes Service Tax Demand [Read Order]

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and observed that mere non-payment of duty is not equivalent to collusion or wilful mis-statement or suppression of facts.

M/s. Vrindavan Construction, the appellant, has provided Works Contract Service to M/s Bharti Infratel Ltd and M/s. Lamco Industries (P) Ltd and also to Government of Bihar vide M/s South Bihar Power Distribution Company Ltd. (SBPDC) during the period 2013-14 to 2016-17.

In the impugned order, the Commissioner (Appeals), has confirmed the demand on the work undertaken by the appellant for SBPDCL on the ground that SBPDCL doesn’t qualify the definition of 'Government Authority' as defined under clause 2(s) of the Notification No. 25/2012-ST dated 20.06.2012 for the period 2014-15 to 2016-17.

The appellant stated that for the purposes of the present case, SBPDCL is also a Government Authority as defined under clause 2(s) of the Notification No. 25/2012-ST dated 20.06.2012 as it is under the control of Government of Bihar and hence the services provided by the Appellant to SBPDCL will be exempt from service tax.

The Appellant further stated that the extended period of limitation cannot be invoked since there was no fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions made with intent to evade payment of tax.

A Two-Member Bench comprising Ashok Jindal, Judicial Member and K Anpazhakan, Technical Member observed that “We observe that every nonpayment/non-levy of duty does not attract extended period. There must be a deliberate default on the part of the Appellant to invoke extended period, which is not there in this case. The conclusion that mere non-payment of duties is not equivalent to collusion or wilful mis-statement or suppression of facts is untenable.”

“Accordingly, we hold that the department has not brought in any evidence to substantiate the allegation of suppression of fact with an intention to evade payment of duty. Accordingly, we hold that the demands confirmed in the impugned order are not sustainable on the ground of limitation also” the Bench noted.

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