Extended limitation for service tax fails where suppression is not proved and later agreements cannot establish earlier awareness.

Extended period of limitation cannot be invoked for service tax demand unless the department proves suppression of facts. The relevant agreement for the period in dispute did not contain any clause creating service tax liability, and a later agreement for 2004-06 could not establish awareness for the earlier period. Since the burden to prove suppression rested on the department and was not discharged, the demand and penalty were barred by limitation, and the impugned order was set aside on that ground.

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Issues: Whether the demand of service tax and penalty could be sustained by invoking the extended period of limitation on the ground of suppression.

Analysis: The plea of limitation was permitted to be raised as a legal plea. The agreement relied upon by the Revenue did not contain, for the relevant period, any clause making provision for service tax liability, and the later agreement for 2004-06 could not establish awareness for the earlier period. The burden to prove suppression lay on the department and was not discharged. As suppression was not established, invocation of the extended period was not justified.

Conclusion: The demand was barred by limitation and the impugned order was set aside on that ground.

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