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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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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.

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