Extended Period of Limitation cannot be Invoked where Alleged Suppression of Facts is Interpretational: CESTAT allows Appeal [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench, allowed an appeal and held that the extended period of limitation cannot be invoked where alleged suppression of facts is interpretational.

The appellant, M/s. Faiveley Transport Rail Technologies, Hosur, rendered services to South Western Railway and also executed services as a sub-contractor under a contract involving its foreign affiliate in connection with the Delhi Airport Metro Express Ltd (DAMEL) project.

Exemption was claimed for the domestic services while the DAMEL-related services were claimed as export on the ground that invoices were raised in foreign current and consideration was received in convertible foreign exchange.

The show cause was issued on 17.04.2015 seeking to demand service tax for the period 2010-12. The Department invoked the extended period of limitation under the proviso to Section 73(1) of theFinance Act, 1994.

The counsel for the appellant argued on the issue of extended period of limitation that all transactions were recorded in the books and returns, and the extended period cannot be invoked as per Cosmic Dye Chemical v. CCE (1995), Pushpam Pharmaceuticals v. CCE (1995), and Uniflex Cables Ltd v. CCE (2011). CESTAT observed that the entire demand has arisen out of audit objections raised by the CERA audit.

Further, it was observed that these issues are interpretational in nature involving understanding of statutory provisions, notifications and contractual arrangements and it is well settled that in cases involving interpretation of law, the extended period of limitation cannot be invoked.

The tribunal held that there is no positive act indicating suppression or intent to evade payment of tax and therefore, the essential ingredients for invoking the extended period are absent. The bench of Ajayan T. V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) allowed the appeal, holding that the invocation of extended period is not justified and the demand is barred by limitation.

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