No demand of service tax in absence of  “suppression‟ or “collusion” with an intent to evade payment of tax 

SOTC Travels Services Pvt. Ltd. Vs Principal Commissioner of Central Excise (CESTAT Delhi)

Conclusion: Assessee was able to correlate the invoices with the undertakings and satisfied the substantial conditions set out in the Exemption Notifications. The extended period of limitation could not be invoked in absence of  “suppression‟ or “collusion” with an intent to evade payment of duty.  Accordingly, the order was set-aside by which the demand of service tax had been confirmed with interest and penalty.

Held:  Assessee was rendering air travel agent services to the Embassy of the United States of America. It claimed that it was the sole and exclusive service provider for the US Embassy and operated from a desk set up within the premises of the US Embassy. On such services, assessee was availing exemption from payment of service tax in terms of Notification dated 23.05.2007 till 30.06.2012 and, thereafter, under Notification dated 20.06.2012. These Notifications exempted services rendered to diplomatic mission or consular posts in India from payment of service tax. In 2014, an investigation was initiated and audit of the records of assessee was conducted in terms of rule 5A of the Service Tax Rules, 1994. During the audit, it was observed that assessee-company was incorrectly availing exemption on services rendered to the US Embassy. Principal Commissioner passed the impugned order denying the exemption to assessee and confirming the demand of service tax with penalty. It was held that assessee was able to correlate the invoices with the undertakings and satisfied the substantial conditions set out in the Exemption Notifications. Even for the subsequent period, assessee continued to provide such services to the US Embassy and the exemption had been allowed. Moreover, even when an assessee had suppressed facts, the extended period of limitation could be invoked only when “suppression‟ or “collusion” was wilful with an intent to evade payment of duty. The invocation of the extended period of limitation, therefore, could not be sustained. Accordingly, the order was set-aside by which the demand of service tax had been confirmed with interest and penalty.

FULL TEXT OF THE CESTAT DELHI ORDER

M/s. SOTC Travels Service Private Limited¹ has filed this appeal to assail the order dated 30.09.2015 passed by the Principal Commissioner of Central Excise, New Delhi², by which the demand of service tax has been confirmed with interest and penalty.

2. The appellant is engaged in rendering air travel agent and other tour related services. During the period of dispute from 01.10.2008 to 31.03.2013, the appellant was rendering air travel agent services to the Embassy of the United States of America³. The appellant claims that it was the sole and exclusive service provider for the US Embassy and operated from a desk set up within the premises of the US Embassy. On such services, the appellant was availing exemption from payment of service tax in terms of Notification dated 23.05.2007 till 30.06.2012 and, thereafter, under Notification dated 20.06.2012. These Notifications exempted services rendered to diplomatic mission or consular posts in India from payment of service tax.

3. In 2014, an investigation was initiated and audit of the records of the appellant was conducted in terms of rule 5A of the Service Tax Rules, 1994⁴. During the audit, it was observed that the appellant was incorrectly availing exemption on services rendered to the US Embassy.

4. The audit resulted into issuance of a show cause notice dated 16.04.2014 proposing to deny the exemption as a result of which a demand of service tax amounting to Rs. 81,11,575 was made. The allegations in the show cause notice are as follows:

“12. Whereas, the party does not appear to be eligible for exemption under Notification No. 33/2007-ST dated 23.05.2007 and Notification No. 27/2012- ST dated 20.06.2012 as they did not fulfill the conditions laid down in the notifications. The said Notifications exempts taxable services so provided by any person for official use of a foreign diplomatic mission or consular post in India from whole of the service tax leviable under section 66 or 66B of the Finance Act, 1994, subject to fulfilment of certain conditions. Whereas, from scrutiny of the documents submitted by the said party, it appears that they failed to fulfil the following conditions in as much as:

(i) The exemption certificates issued by the Ministry of External Affairs in fovour of the American Embassy were not authenticated by the embassy;

(ii) Undertakings issued by the Embassy for claiming exemption from service tax to the said party were not in original; and

(iii) The invoices issued under the provisions contained in rule 4A of the Service Tax Rules, 1994 by the party to the American Embassy under exemption from service tax not contained the serial number and the date of the undertakings furnished by the said Embassy.

Therefore, it appears that the party has wrongly availed exemption from service tax in contravention of conditions contained in Notification No. 33/2007- ST dated 23.05.2006 (upto 30.06.2012) and Notification No. 27/2012-ST dated 20.06.2012 (w.e.f. 01.07.2012).”

5. The appellant filed a reply contesting the allegations leveled in the show cause notice. Further, by a letter dated 10.07.2015, the appellant furnished copies of the undertakings issued by the US Embassy along with copies of tickets and invoices in support of its claim.

6. However, the Principal Commissioner passed the impugned order dated 30.09.2015 denying the exemption to the appellant and confirming the demand of service tax with penalty.

7. The Principal Commissioner framed the following four issues for consideration:

(a) Whether the exemption contained in the Notification dated 23.05.2007 upto 30.06.2012 and Notification dated 20.06.2012 w.e.f. 01.07.2012 is available to the appellant for the services provided by it to the US Embassy despite the non­fulfillment of the conditions laid down in the said Notifications and whether, the service tax can be recovered and demanded from the appellant in the event it is not entitled to the exemption?

(b) Whether the appellant fulfilled its duty for amending the changed address in the Registration Certificate as per the provisions of Act and if not so, whether penalty is leviable?

(c) Whether the extended time period can be invoked?

(d) If yes, whether the appellant is liable for payment of interest & penalty under the provisions of Act/Rules, as alleged in the show cause notice?”

8. In regard to the issue at (a), the Principal Commissioner found that the appellant had not mentioned the running serial no’s and the date of undertakings on invoices issued by it. He also found that the appellant had not struck off the inapplicable portion on the face of the undertakings and on the undertakings issued by the US Embassy there was no endorsement of the name of the party. Thus, some of the mandatory conditions laid down in the Notification were not strictly followed by the appellant.

9. In regard to the issue at (b), the Principal Commissioner found that the appellant had not provided documentary proof regarding the fulfillment of the Service Tax Rules 1994⁵ as the appellant had not got the addresses amended and kept on doing business from the Noida address without having any valid registration certificate.

10. In regard to the issue at (c), the Principal Commissioner found that the appellant had violated the provisions of the Exemption Notifications knowingly for the purpose of evading service tax and, therefore, the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act was correctly invoked.

11. In regard to the issue at (d), the Principal Commissioner found that once the service tax liability was confirmed, interest and penal provisions had to follow.

12. Shri B.L. Narasimhan learned counsel appearing for the appellant made the following submissions:

(i) The appellant is not liable to pay service tax on the services rendered to the US Embassy. In this connection it has been submitted that the appellant has satisfied the conditions specified in the Exemption Notifications dated 23.05.2007 and 20.06.2017;

(ii) The impugned order has gone beyond the show cause notice as it has denied exemption for reasons not even stated in the show cause notice. In this connection reliance has been placed on the following decisions:

a) Commissioner of Customs, Mumbai Toyo Engineering India Limited⁶;

b) Modi-Mundipharma Beauty Products Private Limited (Formerly Known as Modi Revlon Pvt. Ltd.) Commissioner of Service Tax, Delhi-II⁷; and

c) Commissioner of Service Tax, New Delhi M/s. TV Today Network Private Limited (Vice-Versa)⁸; and

(iii) The extended period of limitation could not have been invoked in the fact and circumstances of the case;

13. Shri Harsh Vardhan, learned Authorised Representative appearing for the Department however, supported the impugned order and contended that the appellant did not satisfy the conditions contended in the Exemption Notifications. Learned Authorised Representative also submitted that an Exemption Notification has to be strictly construed and in support of this submission he placed reliance upon the decision of the Supreme Court in Uttam Industries vs. Commissioner of Central Excise, Haryana⁹ and the decision of the Jharkhand High Court in Manpreet Engineering & Const. Co. vs. Union of India¹⁰.

14. The submissions advanced by learned counsel for the appellant and the learned Authorised Representative appearing for the Department have been considered.

15. The appellant has claimed exemption from payment of service tax on services rendered to diplomatic mission or consular posts in India on the basis of the Exemption Notification dated 23.05.2007 for the period up to 30.06.2012 and for the subsequent period from 01.07.2012 on the basis of the Exemption Notification dated 20.06.2012.

16. The Notification dated 23.05.2007 is reproduced below:

“In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all taxable services specified in section 65 of the said Act provided by any person, for the official use of a foreign diplomatic mission or consular post in India, from whole of the service tax leviable under section 66 of the said Act, namely:-

1. Procedure:- To claim the exemption the following procedure shall be fulfilled, namely:-

(i) the foreign diplomatic mission or consular post in India, is issued with a certificate by the Protocol Division of the Ministry of External Affairs that it is entitled to exemption from service tax, as stipulated in the certificate, based on the principle of reciprocity;

(ii) the head of such foreign diplomatic mission or consular post, or any person of such mission or post authorized by him, shall furnish to the provider of taxable service, a copy of such certificate duly authenticated by him or such authorized person, alongwith an undertaking in original, signed by him or such authorized person, bearing running serial number commencing from a financial year and stating that the services received are for official purpose of the said foreign diplomatic mission or consular post;

(iii) the head of such foreign diplomatic mission or consular post or such authorized person shall maintain an account of such undertakings issued during a financial year and such account shall contain:-

(a) the serial number and date of issue of such undertakings;

(b) the name and the registration number of the provider of taxable service; and

(c) the description of taxable service and invoice number.

(iv) the invoice or bill or as the case may be, the challan issued under the provision contained in rule 4A of the Service Tax Rules, 1994 shall, in addition to the information required to be furnished under the said rule, contain the serial number and the date of the undertaking furnished by the said head of foreign diplomatic mission or consular post; and

(v) the provider of taxable service shall retain the documents referred to in point number (i) above alongwith a duplicate copy of invoice issued, for the purposes of verification.

2. In case the Protocol Division of the Ministry of External Affairs, after having issued a certificate to any foreign diplomatic mission or consular post in India decides to withdraw it subsequently, it shall communicate the withdrawal of such certification to the foreign diplomatic mission or consular post.

3. The exemption from the whole of the service tax granted to the foreign diplomatic mission or consular post in India for official purpose shall not be available from the date of withdrawal of such certification given to them.”

17. The Notification dated 20.06.2012, which came into force on 01.07.2012, is also reproduced below:

“Exemption to services provided for official use of a foreign diplomatic mission or consular post in India for personnel use of diplomatic agents or career consular officers

In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable services provided by any person, for the official use of a foreign diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents or career consular officers posted therein from whole of the service tax leviable under section 66B of the said Act, subject to the following conditions, namely :-

(i) that the foreign diplomatic mission or consular post in India, or diplomatic agents or career consular officers posted therein, are entitled to exemption from service tax, as stipulated in the certificate issued by the Protocol Division of the Ministry of External Affairs, based on the principle of reciprocity;

(ii) that in case of diplomatic agents or career consular officers posted in the foreign diplomatic mission or consular post in India, the Protocol Division of the Ministry of External Affairs or the Protocol Department of the State concerned issues to each of such diplomatic agent or career consular officer an identification card bearing unique identification number and containing a photograph and name of such diplomatic agent or

career consular officer and the name of the foreign diplomatic mission or consular post in India, where he is posted;

(iii) that the head of the foreign diplomatic mission or consular post, or any person of such mission or post authorised by him, shall furnish to the provider of taxable service, a copy of such certificate duly authenticated by him or the authorised person, alongwith an undertaking in original, signed by him or the authorised person, bearing running serial number commencing from a financial year and stating that the services received are for official purpose of the said foreign diplomatic mission or consular post; or for personal use of the said diplomatic agent or career consular officer or members of his/her family mentioning the unique identification number as appearing in the identification card issued to them and stating that the services received are for personal use of the said diplomatic agent or career consular officer or members of his/her family;

(iv) that the head of the foreign diplomatic mission or consular post or the authorized person shall maintain an account of the undertakings issued during a financial year and the account shall contain;-

(a) the serial number and date of issue of the undertakings;

(b) in case of personal use of diplomatic agents or career consular officers posted in the foreign diplomatic mission or consular post in India, the name, designation and unique identification number of the diplomatic agent or career consular officer in favour of whom the undertaking has been issued;

(d) the name and the registration number of the provider of taxable service; and

(e) the description of taxable service and invoice number.

(v) The invoice or bill, or as the case may be, the challan issued under the provisions contained in rule 4A of the Service Tax Rules, 1994, shall, in addition to the information required to be furnished under the said rule, contain the serial number and the date of the undertaking furnished by the said head of foreign diplomatic mission or consular post or in case of diplomatic agents or career consular officers posted in such foreign diplomatic mission or consular post in India, the unique identification number of the diplomatic agent or career consular officer, as the case may be; and

(vi) that the provider of taxable service shall retain the documents referred to in the conditions (i), (ii) and (iii) alongwith a duplicate copy of the invoice issued, for the purposes of verification.

2. In case the Protocol Division of the Ministry of External Affairs, after having issued a certificate to any foreign diplomatic mission or consular post in India or as the case may be, the identification card issued to a diplomatic agent or career consular officer, decides to withdraw any one or both of them subsequently, it shall communicate the withdrawal of such certificate or identification card, as the case may be, to the foreign diplomatic mission or consular post.

3. The exemption from the whole of the service tax granted to the foreign diplomatic mission or consular post in India for official purpose or for the personal use or use of their family members shall not be available from the date of withdrawal of such certificate or identification card, as the case may be.

4. This notification shall come into force on the 1st day of July, 2012.”

18. A bare perusal of the Notification dated 23.05.2007 indicates that the following conditions have to be satisfied:

i. Services must have been rendered to a diplomatic mission or consular post in India;

ii. The Protocol Division of the Ministry of External Affairs¹¹ must issue a certificate to the specified diplomatic mission or consular post in India stating that it is entitled to claim exemption from payment of service tax;

iii. The diplomatic mission or consular office must provide the taxable service provider an authenticated copy of such certificate along with an original undertaking (signed and serially numbered) stating that the services have been received for official purpose; and

iv. The invoice raised by the service provider must carry the date and serial number of the undertaking.

19. There is no dispute in the present appeal with regard to the fulfilment of the first condition.

20. The second condition states that the Protocol Division must issue a certificate to the diplomatic/consular post in India. In this regard, the US Embassy was issued certificates from the Protocol Division and this has not been disputed by the Department.

21. The third condition relates to providing certificates and original undertakings by the diplomatic mission/ consular post in India to the service provider. The first two allegations in the show cause notice are based on the alleged non-fulfilment of this condition. The conditions required to be fulfilled; allegations in the show cause notice; submissions made by the appellant; and the findings recorded are tabulated below:

22. It would, therefore, be seen that though a submission was advanced by the appellant in regard to the allegation in the show cause notice that the US Embassy did not provide authenticated certificate to the appellant, no finding has been recorded in the impugned order. It has been pointed out by the appellant that the certificates received from the US Embassy were duly authenticated as they carried the stamp of the US Embassy. These certificates have also been enclosed in the appeal memo. It would also be seen that the impugned order recorded a finding that the format of the undertaking was not proper. The appellant had furnished copies of the original undertakings received from the US Embassy. So long as the undertakings were furnished, it would be immaterial if they were not in the proper format unless some relevant requirement was not contained in the undertaking so as to make the undertaking of no consequence.

23. The fourth condition to the Exemption Notification mentions that the invoices issued by the service provider must carry the serial number and date of the undertaking. The purpose of this condition is to ensure proper correlation between the services rendered and the exemption claimed by the service provider. The show cause notice has alleged that the invoices did not carry the serial number of the undertakings. The exemption was sought to be denied on this ground and the impugned order has also confirmed such denial.

24. Learned Counsel for the appellant submitted that the appellant was able to correlate each invoice with the corresponding undertaking. This is for the reason that the passenger name and the ticket number given on the invoice has also been mentioned on the corresponding undertaking. In this connection reference has been made to a particular invoice corresponding to the certificate and the undertaking and it is as follows:

i. Copy of certificate for the year 2007 – (Page 109 of the appeal memo)

ii. Copy of undertaking issued for travel by air in business class for Mr. Peter Ballinger carrying the ticket number 217­9422-900585– (Page 114 of the appeal memo)

iii. Copy of the invoice for ticket number 217-9422-900585 issued for Mr. Peter Ballinger- (Page 115 of the appeal memo).

25. It has, therefore, been submitted from the entire chain of the aforesaid documents that there is no room to doubt that the services were rendered by the appellant to the US Embassy and such services were exempted by virtue of the undertaking and certificate provided by the US Embassy to the appellant.

26. This submission of learned counsel for the appellant deserves to be accepted as a perusal of the aforesaid documents does substantiate the stand of the appellant.

27. Further, the Exemption Notifications was issued by the Central Government of India in the public interest to exempt taxable services provided to a foreign diplomatic mission or consular post in India. As is evident from clause (i) of both the Notifications, the underlying purpose is to uphold the principle of reciprocity amongst the nations. It is only to ensure that there is no evasion of tax and that services have been rendered specifically to those diplomatic missions/ consular officers to whom a certificate has been issued by the Protocol Officer that the Notifications require a correlation to be established between the invoices and the undertakings. Once these two documents can be correlated, though not in a manner provided for, the substantive conditions to the Exemption Notifications stand fulfilled and the exemption cannot be denied.

28. In this connection reliance can be made to the decision of the Supreme Court in Lakshmiratan Engineering Works Ltd. Assistant Commissioner (Judicial) l Sales Tax, Kanpur Range, Kanpur and Another¹². The proviso to section 9 of the UP Sales Tax Act provided that no appeal against an assessment shall be entertained unless accompanied by satisfactory proof of payment of the amount of tax admitted by the appellant to be due. The corresponding rule 66(2) of the UP Sales Tax Rules provided that the memorandum of appeal shall be accompanied by a challan showing deposit in the treasury of the admitted tax. It was contented before the Supreme Court that rule 66(2) provided the ‘challan’ to be the mode of proving that the admitted tax was deposited. However, section 9 of the UP Sales Tax Act was more general and the proviso thereunder required only satisfactory proof. Hence, it was not open to a rule to make the section narrower by prescribing a particular mode. In this connection, the Supreme Court observed:

“The rule lays down one uncontestable mode of proof which the court will always accept but it does not exclude the operation of the proviso when equally satisfactory proof is made available to the officer hearing the appeal and it is proved to his satisfaction that the payment of the tax has been duly made and in time. In this sense, the rule can be regarded as directory since it lays down one of those modes which will be unquestioned for its validity. The other modes of proof are not necessarily shut out. It is to be remembered that all rules of procedure are intended to advance justice and not to defeat it.”

(emphasis supplied)

29. Reliance can also be made to the judgment of the Allahabad High Court in K. Manufacturers Ltd. vs. The Sales Tax Officer, Sector ll, Kanpur and Others¹³. The Sales Tax Officer refused exemption to sales of yarn on the ground that the petitioner-assessee had not submitted certificates in Form III-A showing that the goods were sold to a dealer for resale in the same condition. While deciding whether a certificate in Form IIIA would be the only proof of sale to a dealer for resale, the Allahabad High Court held that rule 12-A must be construed to mean to provide merely a convenient mode of proving that the purchase of the goods was for resale in the same condition. It was observed that this rule did not lay down that the only mode of proving this was by furnishing certificates in Form III-A. The certificate in Form III-A was one mode by which the dealer could establish that he had not sold the goods to the consumer, but this was not the only mode.

30. The view of the Allahabad High Court was affirmed by the Supreme Court in Chunni Lal Parshadi Lal Commissioner of Sales Tax, UP., Lucknow¹⁴, wherein it was held that the furnishing of a particular certificate in a prescribed manner cannot be treated as the only method for a registered dealer to prove otherwise.

31. In the present case, as noticed above, the appellant was able to correlate the invoices with the undertakings. It can, therefore, be concluded that the appellant satisfied the substantial conditions set out in the Exemption Notifications.

32. It needs to be noted that even for the subsequent period, the appellant continued to provide such services to the US Embassy and the exemption has been allowed.

33. Learned counsel for the appellant also contented that the extended period of limitation could not have been invoked in the facts and circumstances of the present case as there is no mala fide on the part of the appellant. The learned counsel for the appellant submitted that the appellant was the only service provider to the US Embassy for air travel services and the services rendered by it were supported by certificate and undertakings. Learned counsel also submitted that details about availing the benefit under the Exemption Notification was duly declared in the ST-3 returns and this fact has been admitted by the Department at paragraph 16 of the show cause notice. The submission, therefore, is that since the ST-3 returns were filed with the Department, it was aware of the fact that the appellant was claiming benefit under the Exemption Notifications and so no element of suppression or mala fide can be attributed to the appellant in such circumstances. In this connection reliance has been placed on the following decisions:

a) Delhi International Airport Limited Commissioner of CGST, Delhi 2019 (24) GSTL 403 (Tri.- Del.);

b) Onward E-Services Ltd. Commissioner Of Service Tax, Mumbai-Ii 2019 (21) G.S.T.L. 167 (Tri. – Mumbai); and

c) Bharat Hotels Limited Commissioner, Central Excise (Adjudication) 2018 (2) TMI 123- Delhi High Court.

34. The period of dispute in the present appeal is from 01.10.2008 to 31.03.2013. The show cause notice was issued on 16.04.2014.

35. The submissions advanced by the learned counsel for the appellant deserves to be accepted. The appellant had in the ST-3 returns clearly mentioned about availing the benefit of the Exemption Notifications. The Department cannot, therefore, contend that the appellant had suppressed any fact, much less with an intent to evade payment of service tax.

36. The Supreme Court and the Delhi High Court have held that suppression of facts has to be “wilful‟ with an intent to evade payment of service tax.

37. In Pushpam Pharmaceuticals Co. Commissioner of Central Excise, Bombay¹⁵, the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since “suppression of facts‟ had been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty.

38. The Supreme Court in Continental Foundation Joint Venture Holding Commissioner of Central Excise, Chandigarh-I¹⁶ held:

“10. The expression ‘suppression” has been used in the proviso to Section 11A of the Act accompanied by very strong words as ‘fraud’ or “collusion” and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct.”

36. The Delhi High Court in Bharat Hotels Limited Commissioner of Central Excise (Adjudication)¹⁷ also examined at length the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Act and held as follows;

“27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word „suppression‟ in the proviso to Section 11A(1) of the Excise Act has to be read in the context of other words in the proviso, i.e. “fraud, collusion, wilful misstatement”. As explained in Uniworth (supra), “misstatement or suppression of facts” does not mean any omission. It must be deliberate. In other words, there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a positive act of the assessee to avoid excise duty.

xxxxxxx

Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention.”

xxxxxxx

The Revenue has not been able to prove an intention on the part of the Appellant to avoid tax by suppression of mention facts. In fact it is clear that the Appellant did not have any such intention and was acting under a bonafide belief.”

40. In Delhi International Airport, the Tribunal held as follows:

“Second issue on which the appellant has asserted is that extended period of limitation cannot be invoked in the present case and the demand, if any, is time-barred. We find that there is nothing brought out on record that the appellant had any intent to evade payment of Service Tax on the consideration paid by the developers for renting, as alleged. In fact the appellant had paid Service Tax on the consideration being licence fees. There appears no suppression as everything was revealed and was available on balance sheet submitted to the Department during Audit conducted from July, 2012 to 2013 and also the same were reflected in ST-3 returns. It is clear that the appellant nurtured a bona fide belief and it involves interpretation. The Department was also not clear on the matter, as is clear from various correspondences discussed in the preceding paras. Reliance in this regard is placed on :

2016 (42) S.T.R. 634 (Cal.): in the matter of Simplex Infrastructure Ltd. v. Commissioner Service Tax, Kolkata – Extended period not applicable-when assessee is diligent in responding to all notices issued by the Department explaining nature and scope of their business with supporting documents – There was full and sufficient disclosure of nature of assessee’s business – There was no suppression of material facts to keep Department in dark with deliberate intent to evade payment of Service tax – Section 73 of Finance Act, 1994 not invocable. It is settled law that the element of ‘intent to evade’ is inbuilt in the expression ‘suppression’ – Reliance in this regard is also placed on 2006 (4) S.T.R. 583 (Tri.-Bang.) in the matter of Elite Detective Pvt. Ltd. v. Commissioner, and Religare Securities Ltd. v. CST, Delhi as reported in 2014 (36) S.T.R. 937 (Tri.-Del.): wherein it was held that the suppression of fact has to be ‘with intent to evade’.”

41. It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when “suppression‟ or “collusion” is wilful with an intent to evade payment of duty. The invocation of the extended period of limitation, therefore, cannot be sustained.

42. In such circumstances it would not be necessary to examine the contention advanced by learned counsel for the appellant that impugned order has gone beyond the allegations made in the show cause notice.

43. Thus, for all the reasons stated above, the impugned order dated 30.09.2015 passed by the Principal Commissioner cannot be sustained and is set aside. The appeal is, accordingly, allowed.

(Pronounced in open Court on 20.09.2021)