2012 (7) TMI 811 - AT - Service Tax

Demand of service tax - Extended period of limitation Held that - Show-cause notice was issued on 22.9.2006 demanding service tax for the period 16.7.2001 to 31.3.2005 - demand beyond the normal period is not sustainable

Summary

Issues:
1. Time-barred demand of service tax.
2. Inclusion of the value of materials used for providing services in service tax calculation.

Analysis:
1. Time-barred demand of service tax:
The appellant contested the demand of service tax, arguing that the show-cause notice issued on 22.9.2006 for the period 16.7.2001 to 31.3.2005 was beyond the normal period and invoked the extended period on the ground of suppression. The appellant relied on the Tribunal's decision in CCE v. R.K. Photo studio, where it was held that demands beyond the normal period are not sustainable in such cases. The appellant also pointed out that they regularly submitted returns showing taxable services. The Tribunal referred to previous cases, including CCE Satyam Digital Photo Lab and R.K. Photo Studio, and concluded that the demand was indeed time-barred. Consequently, the Tribunal set aside the demand, allowing the appeal.

2. Inclusion of the value of materials in service tax calculation:
The appellant argued that the service tax demand should not include the value of materials used for providing services. The Tribunal considered the appellant's contention and the precedents set in the cases of CCE Satyam Digital Photo Lab and R.K. Photo Studio. The Tribunal concurred with the previous decisions, stating that the extended period of limitation could not be used to demand service tax on this issue during the relevant period. Therefore, the Tribunal found in favor of the appellant, setting aside the demand and allowing the appeal.