2024 (1) TMI 400 - AT - Service Tax

Time Limitation - whether the show cause notice issued in the present case is beyond the period of five years? - HELD THAT - From the provisions of Clause 6 of section 73, the period of five years shall be computed firstly from the date of filing the return. Secondly, where no return is filed the last date on which such return is to be filed. Lastly, the date on which the service tax is to be paid. As per rule 6, the liability to pay the service tax accrues by the 6th day of the following month and as per Rule 7 the assessee is required to submit the half yearly return by the 25th of the following month. In the present case for the period 1.04.2008 to 30.09.2008 the return was required to be submitted by 25th of October, 2008, which would be the relevant date for computing the period of five years. Therefore, the show cause notice issued on 21.04.2014 for the period in question is beyond the period of five years. It is a settled position that no demand can be raised beyond the period of five years. The assessee is correct in saying that the show cause notice is barred by time and is unsustainable. Neither the demand is maintainable nor the interest and penalty is leviable - the impugned order deserves to be set aside - appeal allowed.

Summary

Issues:
The issues involved in the judgment are the challenge to the Order-in-Original confirming part of the demand along with interest and penalty, calculation of service tax liability, time limitation for issuing show cause notice, and applicability of interest and penalty.

Calculation of Service Tax Liability:
The appellant provided taxable services and was alleged to have not discharged the service tax liability for the period 2008-09 to 2012-13. The Commissioner confirmed a balance amount of Rs. 40,01,704 for the period 1.04.2008 to 30.09.2008, after dropping certain amounts due to wrong calculation and excess demand. The appellant challenged the computation of demand, arguing that receipts for the whole year were treated as those for the second half-year. The Tribunal examined the summary of ST-3 Returns and found discrepancies in the calculation methodology.

Time Limitation for Show Cause Notice:
The show cause notice was issued on 21.04.2014, beyond the period of five years from the relevant date. The relevant date for computing the period of five years was determined based on the filing of returns. As per the provisions of the Finance Act and Service Tax Rules, the notice was held to be time-barred. The Tribunal concluded that no demand can be raised beyond the period of five years, rendering the notice unsustainable.

Interest and Penalty:
The Revenue argued that the appellant did not cooperate and wilfully suppressed facts, justifying the imposition of interest and penalty under section 78 of the Finance Act. However, since the show cause notice was deemed time-barred, the Tribunal held that neither the demand nor the interest and penalty were maintainable or leviable. Consequently, the impugned order was set aside, and the appeal was allowed.

Separate Judgement by Judges:
The judgment was pronounced by Hon'ble Ms. Binu Tamta, Member (Judicial), and Hon'ble Mr. P. V. Subba Rao, Member (Technical).