Commissioner of Central Excise And Service Tax Vs Himachal Futuristic Communication Limited (CESTAT Chandigarh)
The case in question involves a dispute between the Commissioner of Central Excise and Service Tax (the appellant/Department) and Himachal Futuristic Communication Limited (the respondent) regarding the payment of Service Tax for providing Installation Commissioning Services during the period 2005-06 to 2007-08 to a company named M/s Exicom.
The appellant alleged that the respondent was not entitled to the benefit of certain notifications that provided abatement from the gross value charged, as they had not included the value of plant, machinery, or equipment supplied by various clients in the assessable value. The Department demanded a Service Tax amount of Rs. 2,85,81,185/- along with interest and penalties under Section 76 & 78 of the Finance Act, 1994.
The Commissioner initially initiated proceedings against the respondent through two show cause notices. However, later, the Commissioner dropped the proceedings. The Department, dissatisfied with the order of the Commissioner, appealed to the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chandigarh.
During the hearing, the Department contended that the extended period of limitation should be invoked as the respondent had not disclosed certain material facts, thereby suppressing the true gross value. They relied on various cases to support their argument.
On the other hand, the respondent claimed that they had availed the benefit of the notifications and had correctly filed the required ST-3 Returns, disclosing the fact of availing the abatement. They also cited guidelines from the Manual for Scrutiny of Service Tax Returns, indicating that it was the Department’s responsibility to scrutinize the returns and raise queries if necessary.
The CESTAT, Chandigarh, after considering both sides’ arguments and examining the records, found that there was no willful suppression of facts on the part of the respondent. They noted that the respondent had correctly disclosed the information in the prescribed format in their ST-3 Returns, and the Department had not raised any objections or queries based on those returns. The CESTAT upheld the order of the Commissioner, ruling in favor of the respondent.
In conclusion, the CESTAT dismissed the Department’s appeal, stating that there was no suppression of facts, and therefore, the extended period of limitation could not be invoked. The case was decided in favor of Himachal Futuristic Communication Limited.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The respondents, Himachal Futuristic Communication Limited, are engaged in installation commissioning under various contracts to different customers and have registered themselves with the State VAT Department as well as Service Tax Department. During the course of Audit by the officers of Auditor General’s Office, it was observed that the respondents were not paying Service Tax in relation to the value of services received by them, for providing Installation Commissioning Services, during the period 2005-06 to 2007-08, to M/s Exicom. Two show cause notices dated 20.10.2010 and 15.04.2011; it was alleged that the respondents are not entitled to the benefit of Notification No.19/2003-ST dated 21.08.2003 and No.1/2006-ST dated 01.03.2006 as value of the tower supplied free by various clients was not included in the assessable value; therefore, the appellants were required to pay Service tax to the tune of Rs.2,85,81,185/- should be recovered along with interest and penalty under Section 76 & 78 of the Finance Act, 1994. Commissioner vide Order dated 29.06.2012 has dropped the proceedings initiated vide above show cause notices. Department is in appeal against the impugned order.
2. Shri Rajeev Gupta assisted by Shri Nikhil Kumar Singh, Authorized Representatives, for the appellant/Department, reiterates the grounds of appeal and submits that though the Adjudicating Authority has held that the respondents had not included the value of plant, machinery or equipment erected, commissioned or installed in the gross value charged by them from the service recipients and as such they were required to pay Service Tax on the gross value charged without availing the benefit of abatement, he dropped the proceedings finding that extended period cannot be invoked; the Adjudicating Authority has erred in appreciating the fact that in the liberalised scenario, the appellant/assessee themselves assesses the tax liability, pays the same and files the returns; it is incumbent upon the appellants to check if they have fulfilled the conditions laid down in the notifications before availing the abatement; mere filing of ST-3 Returns does not mean that the appellants have disclosed the true gross value. He submits that the periodical scrutiny of ST-3 Returns by the Department is limited to figures declared by the assessee and in any manner, it will not make Department aware of the true gross value; therefore, the Adjudicating Authority has clearly erred in holding that the appellants have suppressed any material fact/ figure.
3. Learned AR submits that the Hon’ble Supreme Court in the case of Dilip N. Shroff- 2007 (219) ELT 15 (SC) has examined the word “Conceal”, which according to law lexicon means “to hide or keep secret”; the word “Conceal” is “Con+celare”, which implies to hide; as the respondents have not disclosed the material facts before the Department and the same was noticed only during the audit of records, there is clear suppression of fact as held by the Hon’ble Supreme Court in the case of Mallur Siddeswara Spinning Mills Private Limited- 2004 (166) ELT 154 (SC). He contends that extended period is invokable in the instant case and penalty under Section 78 is invokable; he relies upon the following cases:
