2016 (7) TMI 658 - AT - Service Tax

Extended period of limitation - Validity of SCN issued after one year from the date of knowledge - Maintenance & repair services - failure to discharge service tax liability or file ST-3 returns. - Held that - In the show-cause notice, it is not stated that there was delay on the part of appellant in furnishing the details necessary for computation. There is no whisper in the show-cause notice that due to delay caused on the part of appellant, it was not possible to collect details. In any case, after issuance of summons on 02/09/2008, the statement of Mr. Viswanathan was recorded on 15/09/2008. Therefore it can be said that Department had acquired knowledge at least on 15/09/2008. The show-cause notice issued beyond the period of one year from the date of acquiring knowledge is time barred. As there is no allegation in the show-cause notice that appellant caused delay in furnishing information or did not co-operate with the investigation/inquiry, the findings of the Commissioner(Appeals) that the details furnished was insufficient to compute liability is based on mere assumptions. It is proved that Department acquired knowledge on 15/09/2008. Demand set aside - decided in favor of assessee.

Summary

Issues:
1. Service tax liability for re-treading old tyres.
2. Barred by limitation - time frame for issuing show-cause notice.
3. Sufficiency of details provided by the appellant for tax computation.

Analysis:
1. The appellants were involved in re-treading old tyres, categorized as maintenance & repair services, and failed to discharge their service tax liability despite registration in 2007. A show-cause notice was issued in 2010 for the period from 2007 to 2010, leading to confirmation of demand, interest, and penalties by the original authority and Commissioner (Appeals), prompting the appellant's appeal.

2. The appellant argued that the demand was time-barred, as the Department had full knowledge since September 2008 but issued the notice in October 2010, exceeding a two-year period. The Department contended that insufficient details were provided by the appellant, justifying the delayed notice. The tribunal observed that the show-cause notice lacked any mention of delay caused by the appellant, and as the Department had acquired knowledge by September 2008, issuing the notice after a year was time-barred. The tribunal held the demand as unsustainable due to being time-barred, as no delay or lack of cooperation was proven on the appellant's part.

3. The Assistant Commissioner argued that the appellant did not disclose all details necessary for tax computation, justifying the delayed notice issuance. However, the tribunal noted that the appellant had submitted relevant details in response to summons and letters, disproving the Department's claim of insufficient information. The tribunal emphasized that the Department had acquired knowledge by September 2008, making the delayed notice unjustifiable. Consequently, the tribunal allowed the appeal, declaring the demand as time-barred and unsustainable, providing the appellant with consequential reliefs.