2011 (3) TMI 189 - AT - Service Tax

Service Tax Notice Deemed Time-Barred Due to Exceeding Statutory Limit

The Tribunal found that the show-cause notice dated 19-10-2005, demanding Service Tax, penalties, and interest, was issued beyond the permissible time ... Demand - Time barred - Interim judgement - It is also seen that the said ratio has been followed by the Tribunal in the case of Parry Enterprises Indian Ltd. v. CCE&C [Order No. A/1185/WZB/Ahd./2010, dated 6-8-2010] - Held that: the show-cause notice dated 19-10-2005 issued to the appellant is barred by limitation - Decided in the favour of the assessee Issues Involved:1. Service Tax liability on Goods Transport Operators and Clearing & Forwarding Agent services.2. Timeliness of the issuance of the show-cause notice dated 19-10-2005.Issue-wise Detailed Analysis:1. Service Tax Liability on Goods Transport Operators and Clearing & Forwarding Agent Services:The appellants were recipients of services from Goods Transport Operators during the period from 16-11-1997 to 2-6-1998 and from Clearing & Forwarding Agents from 16-7-1997 to 16-10-1998. The Superintendent of Central Excise directed the appellant to pay Service Tax on these services, which was challenged but ultimately dismissed by the Hon'ble Andhra Pradesh High Court. Consequently, a show-cause notice was issued on 19-10-2005, demanding Service Tax of Rs 25,85,073 along with penalties and interest. The adjudicating authority confirmed the demand, and the Commissioner (Appeals) upheld this decision, citing the Finance Bill of 2003. The appellant conceded that, on merits, the Larger Bench decision in Agauta Sugar & Chemicals v. CCE was against them regarding the Service Tax liability for the relevant period.2. Timeliness of the Issuance of the Show-Cause Notice:The central issue was whether the show-cause notice dated 19-10-2005 was issued within the permissible time frame. The Finance Bill of 2003 required the show-cause notice to be issued by 13-5-2004, one year from the date the President assented to the bill on 14-5-2003. The appellant argued that the notice was time-barred as it was issued beyond this period. The Revenue contended that the period from 12-3-2004 to 21-3-2005, during which the Hon'ble High Court's interim order was in force, should be excluded from the limitation period. The Tribunal examined the letter dated 4-11-2003, which directed the appellant to pay Service Tax but did not request details from the appellant. The interim order from the High Court suspended this letter but did not restrain the issuance of a show-cause notice.The Tribunal referred to the Supreme Court's judgment in Gokak Patel Volkart Ltd. v. Collector of Central Excise, which clarified that an interim order staying the collection of duty does not extend the period for issuing a show-cause notice unless explicitly stated. The Tribunal found that the Revenue misunderstood the interim injunction and failed to issue the notice within the stipulated time. Consequently, the show-cause notice dated 19-10-2005 was deemed time-barred.Conclusion:The Tribunal concluded that the show-cause notice was issued beyond the permissible period and was thus time-barred. The impugned orders were set aside, and the appeals were allowed.