No Evidence of Willful Suppression to Invoke Extended Limitation: CESTAT Allows Service Tax Appeal [Read Order]
The tribunal stated that to invoke the extended period, the Revenue must demonstrate a 'positive act' of suppression or misstatement with the necessary 'mens rea' (intention to evade tax).
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the Revenue failed to establish willful suppression to invoke the extended limitation period, and allowed the appeal.
M/s Globe Ground India Private Ltd., the appellant, faced a demand for service tax, interest, and penalty upheld by the Commissioner of Central Tax (Appeals-II), Delhi. The demand pertained to alleged non-payment of tax on imported services, non-reversal of Cenvat credit, and short payment of tax for the period 2014-15 to the first quarter of 2017-18.
Aggrieved by the order, the appellant approached the CESTAT. The appellant's primary contention was that the show cause notice, issued on 21.10.2019, was barred by limitation as it was served beyond the normal period. They argued that the Revenue had wrongly invoked the extended 5-year period under the proviso to Section 73(1) of the Finance Act, 1994, as there was no wilful misstatement, suppression of facts, or intent to evade tax.
The Revenue justified the invocation of the extended period, stating that the fact of non-payment or short-payment of service tax was suppressed by the appellant. It was argued that this information was not ascertainable from the ST-3 returns filed by the appellant and was only uncovered during a departmental audit.
The single bench of Mr. Ajay Sharma, Member (Judicial), observed that the key issue was whether the conditions for invoking the extended period were met. The bench noted that the appellant had regularly filed its ST-3 returns, a fact not disputed by the Revenue. It held that mere non-detection of an issue during a routine audit could not, by itself, establish suppression of facts or a wilful mis-statement.
The tribunal stated that to invoke the extended period, the Revenue must demonstrate a 'positive act' of suppression or misstatement with the necessary 'mens rea' (intention to evade tax). Finding no such evidence on record, the bench concluded that the invocation of the extended period was unsustainable.
Based on this finding on limitation, the tribunal deemed it unnecessary to examine the merits of the tax demand. Consequently, the impugned order was set aside, and the appeal was allowed in favor of M/s Globe Ground India Private Ltd.
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