Extended limitation and exemption scope under service tax law were confined to false disclosure and only expressly covered security services.

Extended limitation under Section 73 of the Finance Act, 1994 was held invocable where returns contained false disclosure of taxable value and the discrepancy surfaced only on scrutiny of the balance sheet; however, the demand remained enforceable only within five years from the date of the show cause notice, and the portion beyond that period was time-barred. Notification No. 56/98-ST was denied because its exemption for services relating to safe deposit lockers, safe vaults, or security for movable property did not extend to security for vehicles, machinery, and watches. The sustained demand and penalties were upheld only for the legally permissible period, while the time-barred portion was set aside.

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Issues: (i) Whether the demand of service tax for the period beyond five years from the date of the show cause notice was barred by limitation under Section 73 of the Finance Act, 1994; (ii) Whether the appellant was entitled to the benefit of Notification No. 56/98-ST dated 7.10.1998.

Issue (i): Whether the demand of service tax for the period beyond five years from the date of the show cause notice was barred by limitation under Section 73 of the Finance Act, 1994.

Analysis: The notice was issued on 14.3.2005 for the period 16.10.1998 to 31.3.2004. The returns filed by the appellant disclosed false information regarding taxable value and the discrepancy came to light only on comparison with the balance sheet. On that basis, the extended period of limitation was held invocable, but the period of demand falling beyond five years from the date of the notice could not be sustained.

Conclusion: The demand is sustainable only within the permissible period and is barred to the extent it exceeds five years from the date of the show cause notice.

Issue (ii): Whether the appellant was entitled to the benefit of Notification No. 56/98-ST dated 7.10.1998.

Analysis: The notification covered services relating to safe deposit lockers, safe vaults, or security for movable property. The appellant provided security to vehicles, machinery, and watch against theft or pilferage, which did not fall within the notified exemption.

Conclusion: The appellant was not entitled to the benefit of the notification.

Final Conclusion: The demand and penalties were upheld for the part sustained by limitation, while the demand and penalties relating to the time-barred portion were set aside.

Ratio Decidendi: Where suppression or false disclosure justifies invocation of the extended period, the tax demand remains enforceable only within the statutory limitation period, and an exemption notification must be confined to the services expressly covered by its terms.

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