The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), found that there is no intention to evade service tax payment on treating advance amount as security deposit.
The appellant, Applied Solar Technologies (India) Pvt Ltd, is engaged in the business of providing Hybrid Power Solutions to the towers of various telecom service operators.The appellant provides uninterrupted power supply through solar/diesel systems for the operation and maintenances of such sites in case power supplied by the Electricity Board is not available for some reason.
A show cause notice dated was issued to the appellant for the period 2010-11 to 2014-15 regarding non-payment of service tax on the advances received from clients in relation to the services to be provided and regarding irregular availment of CENVAT credit in respect of capital goods and utilization thereof.
The Department contended that the assessee, had intentionally and willfully suppressed the details of providing/receiving that impugned taxable services and did not file prescribed ST-3 Returns containing the details correctly therein with the intention to short payment/non-payment of the applicable Service Tax on such services.
The Department was of the view that the assessee was aware about the nature of such advances as he had entered into different types of agreements for different kinds of advances/ security deposits but he has shown under a single heading in his Balance Sheet which reflects his intention to evade the Service Tax.
The Commissioner has recorded a finding that though the Agreement referred to the amount as advance but still the appellant made an attempt to treat it as a security deposit, which clearly shows that there was suppression of facts with an intent to evade payment of tax.
The Bench comprising Justice Dilip Gupta, President and PV Subba Rao, Technical Member observed that “There is no error in the finding recorded by the Commissioner in this regard, as indeed the appellant did try to evade payment of service tax by treating the amount as a security deposit when in fact it was clearly an advance, which fact was very specifically mentioned in the Agreement. The intention to evade payment of service tax by suppression of material facts is writ large.”
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