Mere Procedural Violation for complying with Condition of Notification not Suppression for Invoking Extended Period of Limitation: CESTAT [Read Order]

The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that mere procedural violation for complying with condition of the Notification is not the act of suppression for invoking extended period of limitation.

The appellant is exporting their produce to various countries and to promote their sales they have appointed a commission agent LG Electronics Inc, Korea. They entered into an agreement dated 01.01.2009, specifying the terms and conditions for engagement of the service provider. Appellants were required to pay service tax on the commission received under reverse charge mechanism but for Exemption Notification No.18/2009-ST by following the prescribed procedure.

Audit officers conducted an audit of the records of the appellant for the period April 2010 to March 2011. In the audit note communicated vide CERA No.52211-12 it was alleged that the appellant has not paid service tax amounting to Rs.30,71,176/- on account of commission of Rs.2,98,17,242/- paid by them during the year 2009-10 to Foreign Service Provider.

The show cause notice has been issued invoking the extended period of limitation alleging that the appellant had not produced the copy of agreement with the foreign service provider and the relevant documents to audit at the time of audit. Though these documents were in existence and were made available to revenue authorities even before the issuance of show cause notice.

A Two-Member Bench of PK Choudhary, Judicial Member and Sanjiv Srivastava, Technical Member observed that “As all the information which was necessary to determine eligibility under Notification No.18/2009- ST was available with the Revenue and the prescribed Return/Form was filed by the appellant they could not have suppressed any fact from the Department for which extended period of limitation could have been invoked. Where merely a procedural violation in respect of complying with a condition of Notification cannot be said to be an act of suppression for invoking extended period of limitation. No justification for invoking extended period of limitation is forthcoming from the show cause notice, order in original or the impugned order.”

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