Extended period not invokable when no suppression of facts

PJ/Case Laws/2012-13/1078

Case: Parshwanath World Vision V/s Commissioner of S.T., Ahmedabad

Citation: 2012 (25) S. T. R. 95 (Tri. - Ahmd.)

Issue:- Non-payment of service tax – no suppression of facts – extended period not invokable.

Brief Facts:- Demand of service tax of Rs. 5,503/- against the Appellant was confirmed for non-payment of service tax. Penalties were imposed by holding suppression of facts.

In appeal, Commissioner (Appeals) confirmed the demand. Hence, appellant is in appeal before the Tribunal.

Appellant’s Contention:- Appellant primarily contended that they were not aware of the incidence of service tax on them. They have relied upon the CBEC Letter F. No. 137/167/2006-CX-4, dated 3-10-2007. It was also argued vehemently against invoking the provisions of suppression of facts and that the show cause notice on this basis of extended period cannot survive.

It was contended that delay was due to the fact that it was a new provision and unawareness of law and financial hardship to which the office of the assessee was not fully acquainted with and the delay was only bona fide.

Respondent’s Contention:- Revenue contended that as per para 4 of the Order-in-Original that the Adjudicating Authority had considered the issue of suppression of facts and found that the plea of no knowledge or bona fidely did not appear to be sustainable as they themselves have received services from multi system operator on which they had earlier claimed the service tax.

Reasoning of Judgement:- Reliance was placed on the Supreme Court in the case of Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bombay [1995 Suppl (3) SCC 462 = 1995 (78) E.L.T. 401 (S.C.)] wherein it was observed, "we find that suppression of facts can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty when facts were known to both the parties, by one to do what he is settled law that mere failure to declare does not amount to wilful suppression.

The Tribunal found that CBEC Letter No. F. No. 137/167/2006-CX-4, dated 3-10-07 is relevant. It is clarified in the letter that conclusion of proceedings in terms of sub-section 1A & 3 of Section 73 implies conclusion of entire proceedings under the Finance Act. In view of the discussions and findings above, impugned order set aside.

Decision:- Appeal allowed.

Comment:- Although the amount involved is very less in this case but the principle laid down is very important. Section 73(3) has been interpreted wherein the tax and interest is paid before issue of show cause notice then penalty should not be imposed. This decision has also interpreted “wilful suppression”. When the facts are known to both the parties then it cannot be said as “wilful suppression”.

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PJ/Case Laws/2012-13/1078

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