The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that since the Show Cause Notice (SCN) stands time-barred, confirmation of service demand proposed in the SCN is not sustainable.
The bench of Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that it is the responsibility of the Central Excise Officer with whom the Returns are filed to scrutinise them and if necessary, make the best judgment assessment under section 72 and issue an SCN under Section 73 within the time limit. If the officer does not do so, and any tax escapes assessment, the responsibility for it rests on the officer.
The bench stated that although the Central Excise Officer is empowered to scrutinise all the Returns call for records and if necessary, make the best judgment assessment, if, as per the instructions of CBIC, the officer does not conduct a detailed scrutiny of same Returns and as a result is unable to discover any short payment of tax within the period of limitation, neither the assessee nor the officer is responsible for such loss of revenue. A loss of Revenue is the risk taken by the Board as a matter of policy.
The bench clarified that extended period of limitation cannot be invoked unless there is evidence of fraud or collusion or wilful misstatement or suppression of facts or violation of the provisions of Act or Rules with an intent.
The tribunal stated that intentional and wilful suppression of facts cannot be presumed because the appellant was operating under self-assessment or because the appellant did not agree with the audit and claimed that CENVAT credit was admissible; or because the appellant did not seek any clarification from the Revenue; or because the officer did not conduct a detailed scrutiny of the Returns and the availment of CENVAT credit which is alleged to be inadmissible and was discovered only during audit.
The Appellant are engaged in manufacture of HDPE Laminated Paper bags and PP Laminated paper bags.
While auditing the records of the Appellants, the Central Excise Audit officers, observed that the Appellant had wrongly availed Cenvat credit on vehicle repair, maintenance & Insurance and Hotel service.
Therefore, the SCN was issued to the Appellant proposing recovery of such inadmissible Cenvat credit.
The assessee submitted that the period in dispute is September 2013 to September 2014 whereas the SCN was issued on 06.01.2017. Thus, the demand issued beyond a period of one year from the date of filing returns is time-barred and the invocation of extended period does not arise as there was no suppression of facts with intent to evade payment of Service tax/excise.
The tribunal while allowing the appeal of the assessee set aside the SCN and the consequent order.
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Case Details
Case Title: New Age Laminators Private Limited Versus Commissioner of Central Goods And Service Tax & Central Excise &-Alwar
Case No.: Service Tax Appeal No. 53697 Of 2018
Date: 09.01.2025
Counsel For Appellant: G.G. Gupta
Counsel For Respondent: S. K. Meena
