Non-Filing of ST-3 is Positive Act of of Evading tax: CESTAT holds Extended Limitation Rightly Invoked [Read Order]

The appellant, Anil Gaur, a commission agent registered under Business Auxiliary Services, was found to have received ₹17,53,015 as commission between April 2016 and June 2017 without paying service tax or filing the mandatory ST-3 returns.

The department issued a show cause notice demanding ₹2,77,952 in service tax, along with interest and penalties. The adjudicating authority confirmed the demand, and the Commissioner (Appeals), Jodhpur, upheld the order, leading to the present appeal before the Tribunal.-

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Before the Tribunal, the appellant contended that the show cause notice was time-barred, asserting that the delay in responding to departmental communications was unintentional and due to his small-scale operations as an individual commission agent.

It was argued that any omission was later rectified and could not amount to willful misrepresentation. The appellant also submitted that the department could have invoked best judgment assessment under Section 72 instead of alleging suppression.

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Rejecting these arguments, Dr. Rachna Gupta (Judicial Member) observed that the appellant had repeatedly failed to respond to departmental letters and summons issued between July 2017 and February 2020 and had not filed ST-3 returns despite being fully aware of his tax liability.

The Tribunal further noted that the appellant had earlier settled similar tax dues for the period 2011-2016 under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, which showed awareness of liability under the service tax regime.

The bench of Dr. Rachna Gupta (Judicial member) held that this pattern of non-compliance amounted to suppression of facts and willful misrepresentation, thus validating the department’s invocation of the extended limitation period.

On merits, the Tribunal said that the commission received for Business AuxiliaryServices was taxable and not covered under the negative list or exemptions, thereby confirming the demand. It held that non-filing of ST-3 returns and non-payment of tax was a deliberate and positive act of tax evasion.

Accordingly, the Tribunal upheld the Commissioner (Appeals)’s order and dismissed the appeal, reiterating that extended limitations and penalties were rightly imposed.

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