CESTAT: Burden of proof lies on Revenue w.r.t. intention of assessee to evade Excise Duty

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the Revenue department bears the burden of proof to demonstrate an assessee's intention to evade excise duty. This decision came in a case where a university was accused of intentionally evading service tax. CESTAT found that the non-payment was due to a genuine belief about tax liability, not wilful evasion.

In M/S. Mahatma Gandhi University of Medical Sciences and Technology v. Commissioner, Central Excise & Central Goods and Service Tax, Jaipur [Service Tax Appeal No. 50962 of 2020 (SM) dated September 08, 2021], Mahatma Gandhi University of Medical Sciences and Technology ("the Appellant") filed an appeal against impugning the Order-in-Appeal No. 210 (SM)/ST/JPR/2020 dated May 15, 2020 passed by the Commissioner (Appeals), Central Excise & CGST, Jaipur ("the Respondent").

In the impugned order, the Respondent had alleged the Appellant of intentional evasion as they were short on the payment of Service Tax under Reverse Charge Mechanism for the period of April, 2015 to March, 2016.

The Appellant is a company registered and received services like legal consultancy services, work contract service, manpower recruitment service, maintenance service and security services

The Appellant had paid Service Tax under manpower recruitment or supply agency service on 75% of gross service value under Reverse Charge Mechanism (RCM) (which was done, by the Appellant, in accordance to the Notification No. 30/2012-ST dated June 20, 2012).

The Respondent alleged that the Appellant was required to pay the Service Tax on 100% of the services availed (as per the Amended Notification No. 07/2015-ST dated March 01, 2015).

Whilst the hearing, the Appellant contended that the period in dispute is immediately after the said Amended Notification (that is April, 2015 to March, 2016) and furthermore, the amendment also took effect from April, 01 2015. In the given circumstances, the intentional evasion cannot not be alleged.

As opposed to the contentions made by the Appellant, the Respondent contended that the Appellant had failed to produce any evidence to support their submissions.

After taking perusal of all the facts and evidences, the Honorable Customs, Excise and Service Tax Appellate Tribunal ("the CESTAT"), Delhi Bench held that the non-payment by the Appellant for the said period is merely due to his bonafide belief of his liability to the extent of paying the service tax at 75%. The Tribunal was of the view that the allegations of fraud and concealment were unjust as there was so apparent malafide on the part of the Appellant.

Furthermore, the Tribunal opined that the alleged non-payment cannot be called as willful or intentional act of the appellant to evade the payment of duty. Lastly, it was adjudged that it is the burden of the Revenue to prove whether the Assessee has intended to conduct evasion.