2017 (4) TMI 559 - AT - Service Tax

Extended period of limitation - Business Auxiliary Service - It is the case of the appellant that the present show cause notice invoking demand for extended period cannot be legally sustained as repeat notice cannot be issued invoking extended period. - Held that - There were two earlier proceedings against the appellant regarding the tax liability as Commission Agent under BAS . It is now a well settled legal position that repeat show cause notices for subsequent periods cannot be, generally, issued invoking again longer period on the ground of suppression, mis-statement, etc. In the present case, we do not find tenable justification to allege suppression on the part of the appellant. The appellants have been put to adjudication twice for their activities under the very same tax entry BAS and both the cases were dropped either originally or on remand proceedings. No justification for the subsequent demand by invoking suppression of facts. - Demand set aside - Decided in favor of assessee.

Summary

Issues:
1. Time bar for issuing notice under Business Auxiliary Service category.

Analysis:
The case involved an appeal against an order passed by the Commissioner of Central Excise (Appeals), Jaipur-II confirming service tax liability under the category of "Business Auxiliary Service" for the period 1.4.2004 to 8.7.2004. The main contention raised by the appellant was regarding the time bar for issuing the show cause notice. The appellant argued that previous show cause notices for the period 2003-2004 were issued but later dropped, and therefore, the present notice invoking demand for an extended period could not be legally sustained. The appellant also emphasized that there was no element of suppression, fraud, or willful misstatement in the facts of the present case.

The appellant's counsel contended that the present show cause notice was attempting to tax the appellant under different sub-clauses of the tax entry compared to earlier notices, despite the activities being mostly similar. On the other hand, the Department argued that the tax liability in the present case was for distinct activities of promoting the business of clients and providing customer care services. The Department proceeded to ascertain the tax liability after collecting details of each contract since the appellants were not registered with the Department.

After hearing both sides and examining the appeal records, the Tribunal focused on the time bar issue. The Tribunal noted that the notice was signed on 8.5.2007, even though it mentioned the date as 10.05.2006, and the demand was issued beyond the normal period invoking suppression of facts. The Tribunal emphasized that repeat show cause notices for subsequent periods cannot be issued invoking a longer period on the ground of suppression or misstatement. The Tribunal found no justification for the subsequent demand by invoking suppression of facts, especially considering previous dropped cases under the same tax entry. Citing the decision of the Hon’ble Supreme Court in the case of Nizam Sugar Factory, the Tribunal held that the demand was hit by time bar in terms of Section 73 of the Finance Act, 1994. Consequently, the impugned order was set aside, and the appeal was allowed on the ground of time bar alone.