Failure to provide adequate documentation for tax exemption leads to tax liability; the extended limitation period is not applicable without evidence of intent to evade.

SANJIV SRIVASTAVA:

This appeal is directed against Order-in-Appeal No.166-ST/APPL/ALLD/2025 dated 03/09/2025 passed by Commissioner (Appeals) Customs, Central Excise & CGST, Allahabad. By the impugned order, Commissioner (Appeals) has rejected the appeal wherein following has been held:-

“ORDER

1. I confirm the demand of Service Tax amounting to Rs.2,04,000/- (Rupees Two Lac Four Thousand Only) including Swachh Bharat and Krishi Kalyan Cess not paid for the period FY 2016-17 and order for its recovery under the provisions of Section 73 (1) of the Finance Act, 1994 , read with Section 174 of the CGST Act, 2017 .

2. I order to recover interest at the appropriate rates on the aforesaid demand of Service Tax under the provisions of the Section 75 of the Finance Act, 1994 , read with Section 174 of the CGST Act, 2017 .

3. I impose a penalty of Rs. 2,04,000/- (Rupees Two Lac Four Thousand Only) under Section 78 of the "Act' read with Section 174 of CGST Act, 2017 upon the party for contravention of various provisions of the Act/Rules discussed hereinabove.

4. I impose penalty of Rs. 10,000/- [Rupees Ten Thousand only) each under the provisions of Section 77 (1)(a), 77(1)(c), 77(1)(d) & 77(2) of the Finance Act, 1994 , read with Section 174 of the CGST Act, 2017 , upon the party for not furnishing information and produce the documents called by the Central Excise Officer.

5. I order to recover from the party, late fee at the rate of Rs.20,000/- [Rupees Twenty Thousand only] for every return not filed from FY 2016-17 under the provisions of Section 70 of the Finance Act, 1994 , read with Rule 7(C) of Service Tax Rules 1994 read with Section 174 of the CGST Act, 2017 , for failure to deposit the service tax on due date.

However, if the Service Tax and interest is paid within a period of thirty days of the date of receipt of this order, the penalty payable shall get reduced to twenty five percent of the confirmed amount, in terms of provisions of Section 78 of the Act provided that the reduced penalty is also paid within thirty days of this order.”

2.1 Appellant was engaged in providing services under Section 65B(44) of the Act without obtaining any registration from the department. The said services are not covered in the Negative list under Section 66B of the Finance Act, 1994 nor exempted.

2.2 On the basis of information provided by the CBDT for the period 2016-17 that the appellant have shown to have received the consideration of Rs.13,60,000/- against sale of service in their ITR for the corresponding period. However, as per record no service tax was found to have been discharged.

2.3 An inquiry was initiated by the department to ascertain the nature of services provided and the leviability of service tax thereon, if any. During the course of investigation the appellant was requested to provide certain documents which could enable the department to see that whether there was any evasion of service tax on the considerations received by appellant during the material period. Appellant did not respond, hence the demand was quantified on the basis of available figures. It was observed that appellant had short paid service tax as detailed in table below:-

2.4 Alleging suppression, a show cause notice dated 18.10.2021 was issued to the appellant asking them to show cause as to why:-

“(i) An amount of Rs. 13,60,000/- (Rupees Thirteen Lacs Sixty Thousand Only) should not be treated as the value of taxable services provided by them during the Financial Years 2016-17, and accordingly Service Tax amounting to Rs.2,04,000/- (Rupees Two Lakhs Four Thousand Only) as detailed in Table-A not paid /short paid including Swachh Bharat Cess and Krishi Kalyan Cess should not be demanded and recovered from them under proviso to Section 73 (1) of the Finance Act, 1994 as amended read with Section 174 of the CGST Act, 2017 ;

(ii) Interest at the appropriate rate should not be charged and recovered from the "Noticee' in respect of amount of service tax ment