2026-VIL-1585-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Penalty for failure to deposit collected service tax - Willful suppression and intent to evade duty - Appellant registered for Manpower Recruitment Agency Service collected service tax at prescribed rate from clients but deliberately failed to deposit the same to government exchequer within statutory time limit - Whether penalty under Section 76 can be imposed for failure to deposit tax without establishing mens rea or intention to evade - HELD - Penalty under Section 76 is for failure to deposit tax in time. When admittedly assessee was not depositing tax by due date, penalties must be imposed even if assessee claims no mens rea, as the statutory provision requires only proof of default in compliance without establishing intent. The deliberate act of collecting service tax from clients but not remitting it to government constitutes willful suppression with intent to evade payment. Statements recorded under Section 108 of Customs Act, 1962 are admissible as substantive evidence, being invested with status of judicial proceedings and neither hit by exclusionary rules of Evidence Act nor violating constitutional protection against self-incrimination. For retraction of statement to be legally potent, it must be contemporaneous. Directors of appellant admitted collecting service tax but not depositing same with government, constituting grave offence. Reduction in penalty imposed on directors was erroneous and unsustainable - Penalty imposed on directors is restored - The appeals filed by the department are allowed and the appeal filed by the assessee is dismissed - Service Tax - Extended period of limitation - Invocation on ground of willful suppression - Appellant failed to declare short-paid service tax liability in statutory ST-3 returns filed for relevant half-yearly periods despite collecting service tax from clients - Whether extended period of limitation can be invoked under proviso to Section 11A where there is willful suppression of facts with intent to evade duty - HELD - Extended period of limitation of five years applies where short payment is by reason of willful suppression of facts with intent to evade payment of duty. Mere omission to give correct information is not suppression unless it was deliberate to stop payment of duty. Suppression means failure to disclose full information with intent to evade payment of duty. When Revenue invokes extended period, burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with willful misstatement. In present case, appellant deliberately concealed short-paid service tax liability from statutory returns despite collecting tax, constituting willful suppression with intent to evade duty - Invocation of extended period of limitation is upheld - Service Tax - Valuation of services - Determination of assessable value for housekeeping services - Department quantified taxable value of housekeeping services without reference to original invoices issued by appellant, appellant contested value and submitted invoices showing lower assessable value - Whether taxable value was correctly determined or whether matter requires remand for re-determination based on original source documents - HELD - Where taxability of services is not disputed but assessable value is contested, the assessable value must be ascertained based on original documents namely invoices available with department. The show cause notice was deficient and vague in not specifying the basis for quantification of taxable value. However, as taxability of services has not been disputed, it is reasonable and proper to remand matter to adjudicating authority for determination of correct assessable value after seeking relevant details and submissions from appellant. The adjudicating authority should re-adjudicate the demand by reference to original invoices and supporting documents - Matter is remanded for re-determination of assessable value and service tax liability with respect to housekeeping services.
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