2014 (4) TMI 35 - AT - Service Tax

Rectification of mistake - Duty demand - SCN issued beyond period of limitation - Held that - show cause notice was issued by invoking the proviso to Section 73 of the Act, which provides that demand for five years can be made in the case of suppression or misstatement of facts. Therefore, we find no merit in the contention of the applicant that the show cause notice is served not within one year. Further, we find that though the demand in the show cause notice is by invoking extended period of limitation, however while passing the final order, the Bench set aside the demand beyond the normal period. In these circumstances, we find no error apparent on record in the final order - Decided against Appellant.

Summary

Issues:
1. Rectification of mistake in final order regarding demand confirmation for normal period served beyond the period of limitation under Section 73 of the Finance Act.
2. Interpretation of proviso to Section 73 of the Finance Act allowing demand for five years in cases of suppression, fraud, collusion, or willful misstatement.
3. Application of the proviso to Section 73 in determining the validity of the show cause notice timeline.
4. Assessment of whether the final order contains an apparent mistake due to the timing of the show cause notice.

Analysis:
The applicant sought rectification of a mistake in the final order where the demand for the normal period was confirmed despite the show cause notice being served beyond the one-year limitation stipulated in Section 73 of the Finance Act. The applicant argued that the notice must adhere to the statutory timeline, citing higher court decisions. Conversely, the Revenue contended that the notice invoked the proviso to Section 73, which allows a demand for five years in cases of suppression or misstatement. The Revenue asserted that the notice fell within the five-year limit due to allegations of suppression, hence challenging the applicant's position.

The Tribunal examined the provisions of the Act and the specifics of the case. It determined that the show cause notice was indeed issued under the proviso to Section 73, enabling a demand for five years in instances of suppression or misstatement. Consequently, the Tribunal found no merit in the applicant's argument that the notice exceeded the one-year limit. Notably, although the notice invoked the extended period, the final order set aside the demand beyond the normal period. In light of these circumstances, the Tribunal concluded that there was no apparent error in the final order dated 1.10.2013. Therefore, the application for rectification was dismissed, upholding the validity of the demand based on the proviso to Section 73.

This judgment underscores the significance of understanding statutory provisions, such as Section 73 and its proviso, in determining the validity of demands and timelines for serving show cause notices. It highlights the necessity of considering the specific circumstances of each case and the applicability of relevant legal provisions to ensure accurate adjudication. The decision provides clarity on the interpretation of the statutory framework concerning demands in cases involving suppression or misstatement, contributing to the jurisprudence on taxation laws and procedural requirements.