No Extended Limitation in Absence of Suppression Despite Audit Based Demand: CESTAT Sets Aside Service Tax Demand [Read Order]
CESTAT held that the extended Limitation cannot be invoked without evidence of suppression or intent to evade tax
The Customs, Excise and Service Tax AppellateTribunal Kolkata Bench has set aside the Service Tax demand of ₹14.22 lakhs along with interest holding that the invocation of the extended period of limitation was unsustainable in the absence of evidence of suppression or wilful misstatement.
The Tribunal has also set aside the penalty imposed under Section 78 of the FinanceAct, 1994.
The assessee Chakraborty Enterprise was selected for audit for the period 2012-13 to 2015-16, during which discrepancies were noticed in non-payment of Service Tax on advances received, along with some other components.
Further, a SCN was issued on 06.11.2017 invoking the extended period of limitation demanding Service Tax amounting to ₹14.22 lakhs. The demand was confirmed along with interest and penalty, which was upheld by the Commissioner (Appeals).
The assessee claimed that the entire demand was time-barred as all details were properly recorded in the books of accounts and were regularly disclosed in ST-3 returns. It was argued that there was no suppression of facts or intent to evade tax, and the demand arose solely from scrutiny of disclosed records. The assessee also challenged the penalty..
The Revenue department supported the findings of the lower authorities and justified the invocation of the extended limitation period.
The Tribunal K. Anpazhakan (Technical Member) noted that the entire demand was based on documents such as balance sheets, profit and loss accounts, and statutory returns furnished by the appellant to the Department during the course of audit and that no positive act of suppression, fraud, or misstatement was established by the Department.
Without any corroborative evidence to indicate any intent to evade taxes, the essential conditions were not satisfied.
Accordingly, the tribunal held the demand to be barred by limitation and set aside the same along with the penalty. However, it upheld other undisputed demands and interest liabilities.
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