2025 (1) TMI 631 - AT - Service Tax

Short payment of service tax - Cargo Handling Service - Manpower Recruitment and Supply Agency Service - Time limitation - HELD THAT - The SCN is categorical in stating that during 2003-04 to 2006-07, the appellants surrendered Cargo Handling Service to M/s PACL, Naya Nangal and rendered the service of Manpower Recruitment and Supply Agency during the period 2007-08, it was incorrect on the part of the learned Commissioner to confirm the demand on Manpower Recruitment and Supply Agency Service for the period 2003-04 to 2006-07. Extended period of limitation - HELD THAT - Nothing has been brought forth as evidence to show that the appellants have indulged in suppression of facts etc. with intent to evade payment of duty so as to necessitate the invocation of the extended period. It is also the case of the Revenue that the appellants were registered with them and were paying service tax and therefore, there was short payment of service tax; in the light of the fact that the appellants have been paying service tax and were filing the Returns and in the absence of any evidence to allege suppression etc., the Revenue has not made any case for invocation of extended period. Conclusion - i) The demand for Manpower Recruitment and Supply Agency Service for 2003-04 to 2006-07 was set aside. ii) Revenue has not made any case for invocation of extended period. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

Whether the demand for service tax under "Manpower Recruitment and Supply Agency Service" for the period 2003-04 to 2006-07 was valid, given that it was not proposed in the Show Cause Notice.
Whether the invocation of the extended period for demand was justified in the absence of evidence for suppression of facts or intent to evade duty.
Whether the demand for the normal period can be sustained if the extended period is deemed not invocable.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Demand for Manpower Recruitment and Supply Agency Service (2003-04 to 2006-07)

Relevant legal framework and precedents: The legal framework involves the principles governing the issuance and scope of Show Cause Notices, which must clearly specify the demands being made.
Court's interpretation and reasoning: The court found that the demand for "Manpower Recruitment and Supply Agency Service" for the period 2003-04 to 2006-07 was confirmed by the Commissioner even though it was not proposed in the Show Cause Notice, thereby exceeding the scope of the notice.
Key evidence and findings: The Show Cause Notice explicitly mentioned services rendered during 2007-08, not during 2003-04 to 2006-07.
Application of law to facts: The court applied the principle that demands must be confined to what is specified in the Show Cause Notice.
Treatment of competing arguments: The appellant argued that the Commissioner exceeded the notice's scope, while the Revenue reiterated the original findings.
Conclusions: The court concluded that the demand for the period 2003-04 to 2006-07 was not sustainable as it was not covered in the Show Cause Notice.

Issue 2: Justification for Invocation of Extended Period

Relevant legal framework and precedents: The invocation of the extended period requires evidence of suppression, misrepresentation, or intent to evade duty.
Court's interpretation and reasoning: The court found that the invocation of the extended period was mechanical and lacked supporting evidence of suppression or intent to evade duty.
Key evidence and findings: The appellants were registered, paying service tax, and filing returns, negating the claim of suppression.
Application of law to facts: The court applied the requirement for substantive evidence to justify the extended period.
Treatment of competing arguments: The appellants argued against the invocation of the extended period, while the Revenue maintained its position without presenting new evidence.
Conclusions: The court concluded that the extended period could not be invoked due to the lack of evidence of suppression.

Issue 3: Sustainment of Demand for Normal Period

Relevant legal framework and precedents: The principle that if the extended period is not invocable, demands for the normal period cannot be sustained was supported by precedents such as the Infinity Infotech Parks case.
Court's interpretation and reasoning: The court referenced the precedent that demands cannot be sustained for any period if the extended period is not justified.
Key evidence and findings: The court found no basis for sustaining the demand for the normal period once the extended period was deemed inapplicable.
Application of law to facts: The court applied the principle that the entire notice is affected if the extended period is not justified.
Treatment of competing arguments: The appellants relied on legal precedents, while the Revenue did not provide counterarguments.
Conclusions: The court concluded that the demand for the normal period could not be sustained.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "When a notice is issued in support of transactions spread over a period of time and it is found that the extended period of invocation has been invoked, the notice cannot be treated as within limitation for some of the same transaction, once it is found that the extended period of limitation is not invocable."
Core principles established: The scope of a Show Cause Notice cannot be exceeded in subsequent orders; the extended period requires substantive evidence of suppression or intent to evade; and if the extended period is not justified, demands for the normal period cannot be sustained.
Final determinations on each issue: The demand for "Manpower Recruitment and Supply Agency Service" for 2003-04 to 2006-07 was set aside; the invocation of the extended period was not justified; and the demand for the normal period was not sustainable.

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