Extended limitation for service tax fails where taxability was doubtful and no wilful suppression was shown.

Where the taxability of motor vehicle dealer and service station activities under Business Auxiliary Services was already uncertain in the field, mere non-approach to the department for clarification did not establish wilful suppression or a mala fide intent to evade service tax. In that context, the extended limitation period was not available to the Revenue, and the demand raised beyond the normal period was barred by limitation. The Tribunal also followed its earlier view in an analogous matter and treated the existing Board circular as supporting the absence of deliberate evasion.

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Issues: Whether the demand of service tax was barred by limitation and whether the extended period could be invoked in the absence of mala fide intention to evade tax.

Analysis: The activity in question had been the subject of doubt in the field, as reflected in the Board circular, which clarified the scope of taxability of such motor vehicle dealer and service station activities under Business Auxiliary Services. In that background, mere failure to approach the department for clarification could not, by itself, establish willful suppression or intent to evade payment of duty. The existence of such doubt negatived the allegation of mala fide conduct, and the longer limitation period was not available to the Revenue. The Tribunal also relied on its earlier view in an analogous matter taking the same circular into account.

Conclusion: The demand raised beyond the normal period of limitation was barred by limitation and the invocation of the extended period was not sustainable in favour of the assessee.

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