The Customs, Excise & Service Tax Appellate Tribunal New Delhi ruled that appellant is not liable for Service Tax payment due to absence of suppression of facts.
The appellant is engaged inter alia in providing construction services in respect of commercial or industrial buildings, and construction of residential complexes which are taxable under section 65 (105) (zzq) and section 65 (105) (zzzh) of the Finance Act, 1994. The Finance Act, 2010, which was effective from 01.07.2010, added an Explanation to section 65 (105) (zzzh) and provided that construction of a complex intended for sale by a builder shall be deemed to be a service provided by the builder to the buyer. Thus, such services rendered by builders to prospective buyers were also subjected to levy of service tax.
A show cause notice dated 19.03.2013 was, however, issued to the appellant proposing to deny the benefit of the exemption Notification and a demand was made to recover service tax amounting to Rs. 6,79,025/- with interest for the period from July 2010 to September 2010 and penalty under sections 76 and 78 of the Finance Act. The show cause notice also invoked the extended period of limitation provided under the proviso to section 73(1) of the Finance Act on the ground of suppression of facts by appellant, which was detected during the course of audit and which would have otherwise escaped payment of service tax.
Sukriti Dass and Masuma Rizvi, counsel appearing for the appellant, submitted that the date of receipt of cheque is the relevant date for availing benefit under the Notification. Hence, the appellant is entitled to the benefit of exemption as it received the cheques prior to the cut-off date 01.07.2010.
The division bench of Justice Dilip Gupta President And P.V. Subba Rao, Member (Technical) noted that the Commissioner (Appeals) did not even record a finding that the appellant had any intention to evade payment of service tax since all that has been recorded in the impugned order by the Commissioner (Appeals) is that the correct facts came to the notice of the department only when the audit was conducted.
The bench observed that in the absence of a finding that suppression of facts was with intent to evade payment of service tax, which is absolutely necessary, the extended period of limitation could not have been invoked. The entire demand confirmed by the Commissioner (Appeals) falls in the extended period of limitation.
The Tribunal concluded that the appellant may have been under a bonafide belief that it was not required to pay service tax on the amount collected through cheques of dates prior to 01.07.2010 though encashed after 01.07.2010, but in any case there was no wilful suppression of facts by the appellant with intent to evade payment of service tax.
“Such being the position, it is not necessary to examine whether the appellant was justified in claiming exemption from payment of service tax under the Notification”, the bench said.
Case title: M/s Rangoli Division v/s Commissioner (Appeals)
Citation: Service Tax Appeal No. 51722 Of 2018