No extended period if demand arose out of correct figures shown in ST-3 Returns

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Dear Professional Colleague,

We are sharing with you an important judgment of Hon’ble High CESTST, Ahmedabad, in the case of Central Warehousing Corporation Vs. Commissioner of Service Tax, Ahmedabad [(2015)54 taxmann.com 209 (Ahmedabad – CESTAT)] on the following issue:

Issue:

Whether the extended period of limitation Under Section 73 of the Finance Act, 1994, can be invoked, when the demand is arise out of figures shown in ST-3 Returns?

Facts & background:

In the instant case, Central Warehousing Corporation (“the Appellant”) filed an appeal before the Hon’ble CESTAT, Ahmedabad against the Order of the Ld. Commissioner (Appeals) wherein demand of Rs. 6,18,946/- was confirmed against the Appellant by invoking extended period of limitation under Section 73 of the Finance Act, 1994 (“the Finance Act”).

The Appellant submitted that the aforesaid demand was raised as per CERA objection on the basis of short payment of Service tax shown in Service Tax Returns (“ST-3 Returns”) filed by the Appellant. Accordingly, when proper duty calculations were shown in the ST-3 Returns, extended period is not invokable. The Appellant relied upon the following cases in support of his contentions:

  1. Aneja Construction (India) Ltd. Vs. CST [Final Order No. A/1262/2012 – WZB, dated 9-8-2012]
  2. Commissioner Vs. Meghmani Dyes & Intermediates Ltd. [2013 (288) E.L.T 514 (Guj)] (“Meghmani Dyes case”)
  3. Bhansali Engg. Polymers Ltd. Vs. CCE [2008 (232) ELT 561 (Tri. Delhi)]
  4. Johnson Mattey chemical India P. Ltd. Vs. CCE [Final Order No. 50323 of 2014, dated 22-1-2014]

However, the Revenue argued that the extended period is rightly applicable in the present case because the Appellant failed to give details/ information that short payment made in a particular month was made good in the next month’s Service tax payment.

Held:

The Hon’ble CESTAT, Ahmedabad, relying on the decision in the Meghmani Dyes case, held that if prescribed Returns are filed by Assessee giving correct information, then extended period of limitation cannot be invoked. In the instant case also, prescribed ST-3 Returns were duly filed by the Appellant giving correct information and differential tax payable was apparent from the figures furnished by the Appellant.

Accordingly, the Appellant cannot be held to have suppressed any information with intention to evade payment of Service tax and thus, extended period cannot be invoked. Therefore, the demand raised on the Appellant is time-barred.

Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.

Thanks & Best Regards,

Bimal Jain
FCA, FCS, LLB, B.Com (Hons)
 
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