Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/Case Laws/2012-13/1527

- Whether extended period invokable if SCN issued much after the investigation proceedings?

 
Case:-ANAND DECORATORS & HIRERS Vs. COMMISSIONER OF S.T.,AHMEDABAD
 
Citation:- 2013 (30) S.T.R. 86 (Tri. - Ahmd.)
 
Brief Facts:-The appellant is engaged in the business of providing service of 'Pandal and Shamiyana' to various custom­ers which is taxable under the service tax provisions. Intelligence gathered revealed that the appel­lant was not paying service tax properly on the taxable services charged and col­lected by them and evading service tax considerably by not showing the actual amount of service provided. Hence, search proceedings were initiated against the appellant and during the course of investigation it was revealed that they are engaged in providing 'Pandal & Shamiyana Service' and 'Mandap Keeper Ser­vice'. Statements of the partner of the appellant were recorded and they admitted their tax evasion. On examination of the records of the appellant, it was noticed that during face of the invoices and at the reverse side of the invoices they showed actual amount which they collected from the customers and paid less amount of service tax in accordance with the amount mentioned in the front side of the invoices. It has also been noticed that the appellant has provided the party plot along with other facilities such as furniture, flowers, mandap, light facilities etc. and collected charges from their customers and shown less amount in the invoices and paid less service tax. As per the documents during the period from April 2006 to December-2006, the appellant had received an amount of Rs. 32,36,225/- on the services provided by them and the service tax payable on that amount comes to Rs. 3,93,653/-, however, they paid only Rs. 1,64,794/- as service tax resulting in the evasion of service tax of Rs. 2,28,859/-. In the mean­time the appellant paid Rs. 1,50,000/- against their above said service tax liabil­ity. In view of the short payment of service tax, a SCN dated 23-4-2009 was is­sued to the appellant demanding service tax of Rs. 2,28,859/- and interest thereon and also proposed penalties under Sections 76, 77 and 78 of the Finance Act, 1994. The said SCN was adjudicated by the Assistant Commissioner and the adjudicating authority confirmed the amount of Service Tax of Rs. 2,06,094/- short paid by them by considering the value declared in the invoices as "cum duty price, as the appellant has not collected separate service tax from their cus­tomers under Section 73(1) of the Finance Act, 1994. The Adjudicating Authority also ordered to recover the interest under Section 75 of the Act and imposed penalties under Sections 76, 77 and 78 of the Finance Act. Aggrieved by the said order appellant filed appeal before Commissioner (Appeals) but appellate authority has rejected the appeal. Thereafter, appellant filed appeal before Tribunal.
 
Appellant Contentions:-The appellant fairly agrees that they have collected excess amount and had not paid service tax on the same. He submits that this was done because they were passing through a period of extreme financial difficulties and because of that they were unable to pay service tax to the full extent. Further the appellant submits that search operation was con­ducted and statement was recorded thereafter in the year 2007 itself. But show-cause notice was issued much later i.e. in 2009.The appellant also submits that in view of the fact that no further investigation was conducted by the department and since all the facts were available with the Revenue in 2007 itself, show-cause notice should have been issued within one year and, therefore, the notice is time barred and demand is not sustainable. He further submits as an alternative submission that penalty under Sections 76 & 78 could not have been imposed in view of the decision of the Hon'ble High Court of Punjab & Haryana in the case of First Flight Courier Ltd. [2011 (22) S.T.R. 622 (P & H)] and the deci­sion in the case of Science Centre [2012 (27) S.T.R. 476 (Tri.-Del.)].
 
Respondent Contentions:- The Respondentsubmits that the appellant has deliber­ately collected excess amount and deliberately suppressed the amount so col­lected by mentioning it on the reverse side of the invoice and not showing in the returns. He also submits that in this case, penalty under Sections 76 & 78 have been rightly imposed and he relies on the decision in the case of Krishna Poduval[2006 (1) S.T.R. 185 (Ker.) and 2012 (25) S.T.R. 417 (Del.)the case of Baja) Travels Ltd., to submit that prior to amendment of Section 78, penalty under Sections 76 & 78 of the Finance Act, 1994 could be imposed and amendment to Section 78 carried out in the year 2008 does not have retrospective effect. The Respondent further  relies upon the decision of the Hon'ble High Court of Gujarat in the case of Neminath Fabrics Pvt. Ltd.[2010 (256) E.L.T. 369 (Guj.)] to submit that the fact whether the department has knowledge or not is not relevant. What is relevant is whether there was suppression of facts/ misdeclaration with an intention to evade duty on the part of the appellant. Once suppression or misdeclaration has proved, the extended period becomes invokable and irrespective of the date of knowledge of the department, the relevant date would be 5 years as per statute.
 
 
Reasoning of Judgment:-The Tribunal heard both the parties and considered the submissions of both sides. The Tribunal finds that in this case the very fact that amounts were collected by mentioning the same on the reverse side of the invoice and not paid service tax on the same clearly amounts to mis-declaration of value and suppression of facts on the part of the appellant. In view of the decision of the Hon’ble High Court in the case of Neminath Fabrics Pvt. Ltd.the contention that show-cause notice was issued after two years, would not be of any help to the assessee. As regards penalties under Sections 76 & 78 of the Finance Act, 1994, the Tribunal observed that there are two High Court decisions against the appellant that of Kerala and Delhi, whereas decision cited by appellant is of only one High Court. Moreover, Tribunal also find that the decision of the Hon'ble High Court of Delhi is the latest and in its decision, the Hon`ble High Court has considered the provisions of Sections 76 & 78 of the Finance Act, 1994 and consequences of amendment of Section 78 of the Finance Act, 1994. There­fore, judicial discipline requires the Tribunal to follow the decision of the Hon’ble High Court of Delhi. For the same reason, Tribunal was unable to follow the decision of the Tribunal in the case of Science Centre also. Therefore, penalty under Sections 76 & 78 of the Finance Act, 1994 and demand of service tax with interest as held by the lower authority and penalty under Section 77 have to be sustained and up­held.
 
The appellant made a request to pay balance amount of service tax, interest and penalty to the extent of 25% of the service tax may be extended as he relied upon the decision of the Tribunal in tile case of Rat­namani Metals & Tubes Ltd.[2012 (285) E.L.T. 274 (Tri.-Ahmd.)] to support his submission.
 
The Tribunal has considered the decision of the Tribunal in the case of Ratna­mani Metals & Tubes Ltd. reported in 2012 (285) E.L.T. 274. The Tribunal has fol­lowed the decision of the Hon'ble Gujarat High Court in the case of Akash Fashion Prints Pvt. Ltd. reported in 2009 (239) E.L.T. 439 (Guj.) and in the case of Akash Fashion Prints Pvt.Ltd., the lower authorities had not extended the benefit of payment of reduced penalty in the event of payment of tax and interest within 30 days of the original order, which is not the situation in the present case. In the result, demand for service tax, interest and penalty as imposed on the appellant have to be upheld and appeal has to be rejected. However, tribunal also find that the lower authorities in this case have imposed penalty of 200% of the amount of service tax demanded on the appellant. According to the provisions of Section 78 of the Finance Act, 1994, penalty shall not be less than the amount of service tax short levied, but shall not exceed to the amount. Therefore, penalty under Section 78 at the minimum would be 100% and maximum of 200%.
Having regard to the facts and circumstances, and taking note of the facts that the appellant is a partnership service provider and the submissions of the appellant that because of stringent financial difficulties, the appellant resorted to this way and taking note of the fact that the amount of Rs. 1.5 lakhs which is almost 75% of the tax demanded was paid before issue of show-cause notice, Tribunal consider that in this case penalty under Section 78 of the Finance Act, 1994 need not be more than 100%. Accordingly in view of the above observation, the appeal is rejected except for reduction of penalty under Section 78 of the Fi­nance Act, 1994 to 100% of the service tax demanded.
 
 
Decision:-Appeal Rejected

Comment:- It can be concluded from this case that a strict approach is followed in the cases of deliberate suppression as the Tribunal upheld the invocation of extended period and also upheld simultaneous imposition of penalties under section 76 & 78 of the Finance Act, 1994.

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com