CESTAT New Delhi: M/s Globe Ground India Pvt. Ltd. vs. Commissioner of CGST – Extended Limitation Period for Service Tax Disallowed.

Headnote:

The appellant, M/s Globe Ground India Pvt. Ltd., challenged the partial demand of service tax, interest, and penalty raised by the Commissioner of CGST, Delhi South for the period FY 2014-15 to Q1 FY 2017-18. The show cause notice was issued on 21.10.2019 after invoking the extended period under Section 73(1) of the Finance Act, 1994. The appellant contested the invocation of the extended period, stating there was no willful mis-statement or suppression of facts. The Tribunal held that mere detection of discrepancy during audit, without positive evidence of suppression or intent to evade tax, cannot justify extended period. Appeal allowed on the ground of limitation without examining merits.

Background:

The appellant was issued a show cause notice on 21.10.2019 for:

Non-payment of service tax on imported services (Rs. 2,24,570/-).

Non-reversal of Cenvat Credit of Rs. 16,10,068/- as per Rule 6(3) of Cenvat Credit Rules, 2004.

Non-payment of service tax amounting to Rs. 690/- on short-excess income.

The period under dispute relates to FY 2014-15 to Q1 FY 2017-18. The notice was issued after more than 2 years, invoking the extended period under Section 73(1) proviso.

Revenue alleged that non-payment or short payment of service tax was not ascertainable from the ST-3 returns filed by the appellant and was discovered only during departmental audit, implying suppression of facts.

Issue:

Whether the extended period under Section 73(1) of the Finance Act, 1994 can be invoked in the absence of evidence of willful mis-statement, suppression of facts, fraud, collusion, or intent to evade tax.

Decision:

The Tribunal held:

1. Filing of routine ST-3 returns by the appellant cannot be construed as suppression of facts.
2. Mere detection of discrepancies during audit does not establish mens rea or intent to evade tax.
3. Extended period under the proviso to Section 73(1) is unsustainable without positive evidence of deliberate suppression or mis-statement.
4. No need to examine merits of the case.

Order:

Appeal allowed on the ground of limitation. Impugned order set aside.

Observations:

1. Extended period of limitation requires clear evidence of fraud, collusion, or deliberate suppression with intent to evade tax.
2. Audit detection alone is insufficient to invoke extended period.
3. Protection of assessee’s rights requires mens rea to be established before extending the period of limitation.

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI

Service Tax Appeal No. 51898 of 2024

M/s Globe Ground India Private Ltd. vs. Commissioner of CGST, Delhi South

Coram: Hon’ble Mr. Ajay Sharma, Member (Judicial)