2024-VIL-1260-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Reimbursement, Extended Period of Limitation, Suppression of Facts – Appellant is engaged in manpower recruitment and other allied activities, was issued show cause notices for demanding service tax on the reimbursement amounts received from its clients - Department invoked the extended period of limitation on the ground that the appellant had suppressed facts with intent to evade payment of service tax - Whether the reimbursement amounts can be subjected to levy of service tax for the period prior to May, 2015 – HELD – The Supreme Court in Intercontinental Consultant and Technocrats Pvt. Ltd. vs. Union of India had held that rule 5(1) of the Service Tax (Determination of Value) Rules, 2006, which was relied upon by the department to include the reimbursement amounts in the taxable value, is ultra vires the provisions of Section 67 of the Finance Act. The Supreme Court observed that the reimbursement amount cannot be treated as "gross amount charged" as that is not a "consideration" for rendering the service. Therefore, the inclusion of the reimbursable cost in the value of taxable service cannot be justified for the transactions made before 14.05.2015 - The impugned order is set aside and appeals are set aside - Whether the extended period of limitation was correctly invoked in the present case – HELD - The Supreme Court in Pushpam Pharmaceuticals Company vs. Collector of Central Excise, Bombay and subsequent decisions has held that mere suppression of fact is not enough, and there has to be a deliberate attempt to evade payment of duty/tax. The Commissioner in the present case could not provide any positive evidence to show that the appellant had deliberately suppressed any fact with an intent to evade payment of service tax. Merely alleging that the appellant had "abused the facility of self-assessment" and did not disclose the correct value in the ST-3 returns is not sufficient to invoke the extended period of limitation. In the absence of any positive evidence of deliberate suppression of facts with an intent to evade tax, the extended period of limitation cannot be invoked. Therefore, the part of the order confirming the demand for the extended period is set aside.
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