2015 (9) TMI 1467 - AT - Service Tax

Invokation of extended period of limitation - Demand and imposition of penalty - Section 73 of the Finance Act, 1994 - short tax paid - job work activities undertaken by the appellant - period involved is 2006-2007, whereas the SCN has been issued on 16.01.2009 - Held that - the SCN dated 16.01.2009 has been issued, seeking recovery of service tax for the period of April 2006 to March 2007, which is beyond the period of one year. No specific allegations have been made in the SCN, justifying invocation of the proviso contained in section 73(1) of the Finance Act, 1994. Therefore, I am in agreement with the submissions of the appellant that the SCN is barred by limitation. The service tax demand confirmed in the Adjudication order and upheld in the impugned order is not justified. I find that the various judgments cited by the appellant are squarely applicable to the facts of the present case. The principles decided by the judicial forum with regard to limitation, is that the extended period of limitation entails both civil and criminal consequences and, therefore, must be specifically stated in the show cause notice, in absence whereof, the court would be entitled to raise an interference. In view of the settled position of law that in absence of any specific allegation, alleging suppression, willful misstatement, fraud etc, the demand cannot be sustained beyond the period of one year. - Decided in favour of appellant

Summary

Issues:
1. Whether the proceedings initiated by the Central Excise Department are barred by the extended period of limitation.
2. Whether the service tax demand confirmed in the Adjudication order is justified.

Analysis:
1. The appellant, engaged in the manufacture of MS pipes, was subjected to proceedings for recovery of service tax by the Central Excise Department for job work activities not amounting to manufacture. The Department claimed the activities fell under "Business Auxiliary Service." The appellant had already deposited the service tax attributable to such service during an audit. The SCN issued sought recovery of short-paid tax, interest, and penalty. The Adjudication order confirmed a service tax demand and imposed penalties under relevant sections of the Finance Act, 1994. The appellant contended that the proceedings were time-barred as the SCN was issued beyond one year from the relevant date. The Ld. Advocate argued that the proviso to Section 73(1) was not invoked in the SCN and specific ingredients like fraud or suppression were not alleged, citing relevant case laws. The Tribunal agreed that the SCN was barred by limitation as it was issued beyond one year without specific allegations justifying an extended period, setting aside the service tax demand.

2. The Ld. DR for the Revenue respondent maintained that the confirmation of the service tax demand was not time-barred. However, the Tribunal found that the SCN issued beyond the one-year period without invoking the proviso to Section 73(1) and lacking specific allegations of fraud or suppression rendered the demand unjustified. Citing relevant case laws, the Tribunal held that in the absence of such specific allegations, the demand cannot be sustained beyond one year. Consequently, the appeal was allowed in favor of the appellant on the ground of limitation, setting aside the impugned order and providing consequential relief as per law.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the proceedings were time-barred due to the SCN being issued beyond the one-year limitation period without specific allegations justifying an extended period. The service tax demand confirmed in the Adjudication order was set aside, and the appeal was allowed with consequential relief.