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Part-108-One Pager Snapshot to cases in Service Tax regime on invoking extended period-(Section 73 of Finance Act, 1994 which was similar to Section 73/74 of CGST Act, 2017)-Part-III

-Extended period not invokable for payment of tax under RCM as revenue received entire tax i.e. partly from recipient and partly from supplier and confirming liability would tantamount to receiving double tax on same transaction.
-Since Finality to Tax liability accorded after substantial delay by CBIC Circular, therefore extended period not invokable
-No Levy of Penalty -presence of bonafide belief
-Tax paid alongwith Interest at the time of audit and before SCN
-Mere allegation that non-payment coming to notice of the department only after gathering intelligence and discreet investigation conducted by the head-quarters preventive unit not held to be sufficient for invoking Extended Period

S.No

Case Subject

Case

Held

1

Extended period not
invokable for
payment of tax under
RCM as revenue
received entire tax i.e.
partly from recipient
and partly from
supplier and
confirming liability
would tantamount to
receiving double tax
on same transaction

Mahatma Gandhi
University of
Medical Sciences
and Technology v.
Commissioner
Central Excise &
Central Goods and
Service Tax, Jaipur
[2021] 132
taxmann.com 97
(New Delhi -
CESTAT)

During the scrutiny of ST-3 Returns, Department noticed that appellant had paid Service Tax on 75% of gross service value under RCM as per the
provisions of Notification No. 30/2012-ST dated 20th June, 2012. However, appellant was liable to pay Service Tax under RCM on 100% of gross
service value in terms of the aforesaid Notification being amended vide Notification No. 07/2015-ST dated 1-3-2015 with effect from 1-4-2015. However,
Service Tax on balance 25% amount of service value stands already paid by the service provider.
Tribunal Observed that, the period in dispute was exactly from the date of coming into effect of amendment i.e. 1-4-2015 till the end of the said
Financial Year i.e. March, 2016. Unawareness of the appellant to such a sudden change to be implemented in so proximity of time of its coming into
effect could not be ruled out. Consequently, it was held that non-payment by the appellant for the said period was merely due to the bonafide belief of
his liability to the extent of paying the service tax at 75% of the service value. Once there was no apparent malafide on part of the appellant and in view
of the aforesaid bonafide belief of the appellant, fastening the allegations as that of concealment fraud and suppression were held to be highly unjustified.
Tribunal further observed that there was no denial on part of the Department that the balance service tax on 25% value of the service was already
been by service provider. The Department, thus, received 100% tax amount on the impugned transaction. Confirming such liability again under the
pretext of the amendment of the applicable Notification would be nothing but would amount to receiving tax twice for the same transaction. Thus, the
appellant liabilities stood discharged and the demand should not have been confirmed. Above all, Department was not entitled to invoke the extended
period of limitation for no willful suppression on part of appellant that too with intent to not to pay duty (full duty already stands paid).
Cases Referred- Pushpam Pharmaceuticals Co. v. Collector of Central Excise 1995 (78) ELT 401, Continental Foundation Jt. Venture v. CCE 2007
taxmann.com 532

2

Since Finality to Tax
liability accorded after
substantial delay by
CBIC Circular,
therefore extended
period not invokable

Autobahn
Enterprises (P.) Ltd.
v. Commissioner of
Service Tax [2022]
136 taxmann.com 73
(Mumbai - CESTAT)

Tribunal observed that the finality was accorded to tax liability by circular no.87/05/2006-ST dated 6th November 2006 of CBEC and therefore in view
of the circumstances and the stand taken by the Tribunal in several decisions, invoking of the extended period for the purpose of imposition of penalty
was held not to be sustainable. Accordingly, the penalty imposed under section 78 of Finance Act, 1994 was also set aside

3

No Levy of Penalty -
presence of bonafide
belief
-Tax paid alongwith
Interest at the time of
audit and before SCN

Fairfest Media
Ltd. v. CGST &
Excise [ST Appeal
No. 78619 of 2018,
dated 19-6-2019

Appellant stated that service tax along with interest has already been paid by the appellant before issuance of SCN.
Tribunal stated that the contention of the appellant was that he bona fidely believed that he was not liable to pay service tax but during the audit, the
audit party informed him that he was liable to pay service tax, then he immediately paid the entire service tax along with interest. Except mere allegation
of suppression, Department did not bring any material on record to prove that there was suppression and concealment of facts to evade payment of
tax. Consequently, imposition of penalty under section 78 of the Act was not justified and bad in law. Moreover, in the impugned order, the learned
Commissioner (Appeals) did not record any finding on suppression of facts by the appellant with an intention to evade tax.

4

Mere allegation that
non-payment coming
to notice of the
department only after
gathering intelligence
and discreet
investigation
conducted by the
head-quarters
preventive unit not
held to be sufficient
for invoking Extended
Period

Vinoth Shipping
Services v.
Commissioner of
Central Excise &
Service Tax [2021]
132 taxmann.com
275 (Chennai -
CESTAT

On the ground of limitation, it was observed by the Bench that during the relevant period, the issue as to whether a sub-contractor has to pay Service
Tax separately even when the main contractor had discharged Service Tax on the very same services was subject matter of litigation before various
fora. In the decisions of Semac (P.) Ltd. (supra), Shivhare Roadlines (supra) and Urvi Construction (supra), the Tribunal had held that sub-contractors
are not liable to pay Service Tax. There were conflicting views and the issue was referred to Larger Bench. In Max Logistics Ltd. v. CCE [Final order
No. 53175/2016, dated 23-8-2016].
Tribunal observed in the SCN, that no positive act of wilful suppression/mis-statement was alleged on the part of assessee. SCN merely stated that:
"…As the non payment/non-registration came to the notice of the department only after gathering intelligence and discreet investigation conducted by
the head quarters preventive unit, it appears that extended period of limitation is applicable to the facts of the case for recovery of service tax."
Tribunal observed even in the Order-in-Original, the only finding for invoking the extended period was that:
"As regards penal action, M/s. Vinoth Shipping Services, Tuticorin have contravened the Act by suppressing the fact of rendering services and not
paying the Tax due during the year 2006 - 07 and by not obtaining registration certificate for service rendered. Hence penalty is imposable under
sections 76, 77 & 78 of the Act."
Tribunal held that there was no clear allegation that appellants had wilfully suppressed facts with the intention to evade payment of Service Tax. The
main contractor/M/s. ACL had collected the full consideration including Service Tax from the clients, which was clear from the records. Appellants from
the very beginning had raised the contention that they were instructed by M/s. ACL that they were not required to pay the Service Tax. Thus, there was
no factual basis for invoking the extended period