By TIOL News Service

MUMBAI, APR 01, 2015: THE DGCEI regional unit came to a conclusion that the appellant having undertaken construction of Baramati High-Tech Textile Park and National Sports Stadium has rendered the services of construction of residential complex.

A SCN came to be issued on 18.10.2013 demanding ST and which was confirmed by the CCE, Aurangabad along with penalties and interest.

Before the CESTAT, the appellant inter alia raised the bogey of limitation by submitting that they had vide letter of September/October 2008 addressed to the Commissioner of Central Excise and Customs, Aurangabad sought advice as to the applicability of service tax to the activity undertaken by them and which was not responded to; that they had filed various ST returns filed by them with the authorities wherein the amounts received by them for these works were shown as being exempted; no questions were asked by the department and moreover audit reports for the period in question (obtained by them under RTI Act) also did not raise any objection.

The AR reiterated the findings of the adjudicating authority & referred to the statement of the Director of Baramati High-tech Textile Park which clearly indicated that the tender which were awarded to the appellant were inclusive of service tax and the appellant was required to pay the same; that the contract signed by the appellant with the authorities was inclusive of all taxes and hence they were aware of the fact that the consideration received by them was inclusive of service tax but despite this they did not discharge the tax liability.

The Bench observed -

"8. In our considered view, the show cause notice dated 18/10/2013 as issued by DGCEI Mumbai-V is to be seen from the angle of limitation as the said show cause notice invokes the extended period for demanding the service tax liability from the appellant. On perusal of the records we find that the appellant herein has vide letter dated 29 September 2008 had informed the Commissioner Central Excise and Customs as under:- x x x

9. It can be seen from the above reproduced letter which was received by the office of the Commissioner of Central Excise and Customs on 3 rd October 2008, seeks a specific direction from the Commissioner as to whether the activities undertaken by the appellant would fall under service tax liability and are eligible for any exemption. We find from records that the office of the Commissioner of Central Excise and Customs, Aurangabad did not respond to such letter nor any further correspondence was entered with the appellant on this matter. We also note from the records that the service tax returns which needs to be filed by an assessee, in this case the appellant, clearly indicates that the appellant had been keeping the Department informed about the amounts received by them which according to him would fall under the category of exempted services. These service tax returns were accepted by the Department and no question were raised nor any clarification was sought from the appellant. On a specific query from the bench, learned Counsel would submit that there was no query from the revenue authorities on the returns which were filed by the appellant. In our considered view, if the revenue authorities were informed about the activities that the appellant is willing to undertake and seeking the clarification whether such activity would fall under the service tax liability or not, and also subsequently indicating in the service tax returns the amounts received by them towards such exempted services, the question of suppressing any material facts from the Department would not arise lead.

10. Yet another angle to entire case would be that the records maintained by the appellants was audited by the audit wing of the Central Excise and Customs Department on 5 th on 15 October 2008 to 18 October 2008, 7 and 24 September 2013. The said audit reports which were produced before us, indicate that the appellant had given all their records for auditing to the authorities and the said audit report does not contain any findings that the appellant's activity of construction of high-tech work and the sports complex would fall under the category of construction of commercial complexes and the appellant is liable to discharge the service tax liability on the amounts received by them. It is to be presumed that departmental officers had access to all the records maintained by the appellants during the audit. If the revenue authorities did not raise any queries when the records were audited, then the show-cause notice issued in October 2013 invoking the extended period for demanding the service tax liability for the period April 2008 to March 2012, is in our considered view blatantly time barred, as it cannot be said that appellant had suppressed any information let alone vital information from the Department with intention to evade tax. In our view the service tax liability confirmed against the appellant is blatantly time barred and the impugned order to that extent is totally incorrect and is liable to be set aside."

The order was set aside and the appeal was allowed with consequential relief.

In passing : s.73A of FA, 1994 to the rescue?

(See 2015-TIOL-595-CESTAT-MUM)