Appellate Tribunal CESTAT AHMEDABAD: Service tax demand set aside on limitation grounds

The Appellate Tribunal CESTAT AHMEDABAD set aside the service tax demand of Rs. 76,16,698 against the telephone service provider appellant for excess tax paid, ruling that the demand was barred by limitation as the notices were issued beyond the normal period. The Tribunal found no mala fide intention to evade duty, considering the appellant's status as a PSU. Consequently, the appeal was allowed solely on limitation grounds, without delving into the merits of the case.

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Issues involved: Confirmation of service tax demand against appellant for excess tax paid and adjustment against subsequent liability, challenge on grounds of limitation.

The judgment by the Appellate Tribunal CESTAT AHMEDABAD confirmed a service tax demand of Rs. 76,16,698 against the appellant, a telephone service provider, for excess tax paid in one month not being adjustable against subsequent month's liability due to non-satisfaction of Rule 6(3) conditions. The demand was confirmed for the period April, 2001 to March, 2003 through a show cause notice dated 25-6-2004.

The appellant's advocate challenged the demand on the basis of limitation, arguing that as a registered service tax payer, all facts were known to the Revenue. Reference was made to a previous Tribunal order in the same appellant's case, where it was held that there was no mala fide on M/s. BSNL, a PSU, and the appeal was allowed on limitation grounds.

The Tribunal, in agreement with the appellant's contention, noted that the notices issued were beyond the normal period of limitation, with one show cause notice being issued after a period of five years. Considering M/s. BSNL's status as a PSU of the Government of India, it was concluded that there was no mala fide intention to evade duty. Therefore, the demand was held to be barred by limitation, leading to the setting aside of the impugned order and allowing the appeal with consequential relief to the appellant without delving into the merits of the case.

Given that the demand in the present case exceeded the normal period of limitation, the impugned order was set aside on this ground alone, resulting in the allowance of the appeal with consequential relief to the appellant.

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