CESTAT Ahmedabad: Service Tax Liability Set Aside, Demand Beyond Limitation Period Impermissible

The Appellate Tribunal CESTAT, Ahmedabad, set aside the service tax liability of Rs. 35,423 against the appellants for providing blank hoardings to advertising agencies. The Tribunal ruled that the demand raised in 2008, beyond the seven-year limitation period from the relevant period, was impermissible. Criticizing the lower authorities for not addressing the limitation issue, the Tribunal remanded the matter for proper consideration, allowing the appellants to contest the case. The Tribunal refrained from discussing the merits and emphasized the importance of considering the limitation period in such cases.

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Issues: Service tax liability on providing blank hoardings to advertising agencies, Limitation period for raising demand

In the judgment delivered by the Appellate Tribunal CESTAT, Ahmedabad, the issue at hand was the confirmation of service tax liability amounting to Rs. 35,423 against the appellants for providing blank hoardings to advertising agencies. The appellants argued that the activities did not fall under the category of advertising agencies as per circulars issued by the Board. However, it was noted that the demand was raised through a show cause notice issued on 08.02.2008 for the period from 01.10.2001 to 31.03.2005. The Chartered Accountant for the appellants acknowledged that the issue of limitation was not raised earlier but requested to raise it now as a mixed question of law and fact.

The Tribunal observed that the show cause notice issued in 2008 was beyond the permissible period of seven years from the starting of the covered period, i.e., 01.10.2001. It was highlighted that there is no provision under the act allowing Revenue authorities to raise a demand after such a prolonged period. The Tribunal criticized the lower authorities for not considering the issue of limitation, emphasizing that it was their legal duty to do so. The failure to address this point was deemed a serious lapse, leading to the decision to set aside the impugned order and remand the matter to the original adjudicating authority for proper consideration.

As the appellants had not raised the issue of limitation earlier, the Tribunal allowed them the opportunity to contest the case before the authorities below upon remand. The stay petition and appeal were disposed of accordingly, with the Tribunal refraining from delving into the merits of the case due to the focus on the limitation issue. The judgment was dictated and pronounced in court by the Tribunal members, Mrs. Archana Wadhwa and Dr. P. Babu.

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