2026-VIL-861-RAJ-ST
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SERVICE TAX High Court Cases

Service Tax - Invocation of extended period of Limitation on ground of fraud, collusion, wilful misstatement or suppression of facts - Respondent classified services under CICS head both before and after introduction of WCS on 01.06.2007 without opting for Works Contract Composition Scheme and instead discharged VAT to State of Rajasthan - Department in audit found shortfall and raised Show Cause Notice beyond normal period of limitation proposing reclassification under WCS head - CESTAT set aside on ground of limitation holding no proof of intent to evade - Whether extended period of limitation can be invoked merely on basis of misclassification without proof of fraud, collusion, wilful misstatement or suppression with intent to evade payment of tax - HELD - Respondent entertained bona fide belief that it was correctly discharging tax liabilities by classifying services under CICS head as no SCN was issued within normal period of limitation despite Department's audit - Mere inaction, omission or classification of services under incorrect head does not amount to fraud, collusion, wilful misstatement or suppression of facts. Something positive other than mere inaction or failure or conscious deliberate withholding of information with knowledge otherwise is required to invoke extended period - Suppression means failure to disclose full information with intent to evade payment of duty and has to be construed strictly being deployed in company of strong words as fraud and collusion - Incorrect statement cannot be equated with wilful misstatement as latter implies making statement with knowledge it was not correct - Department failed to adduce cogent evidence of positive act by respondent evincing intent to evade payment of tax - Respondent had throughout filed returns classifying services under CICS head and Revenue never objected within ordinary period of limitation - Burden cast upon Department to prove suppression of fact with intent to evade tax. Extended period of limitation cannot be invoked merely on basis of misclassification without establishing fraud, collusion, wilful misstatement or suppression with intent to evade – The Ld. CESTAT correctly held no element of fraud, collusion, wilful misstatement or suppression of facts was established – The findings of CESTAT is upheld and the Revenue appeal is dismissed
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