Limitation and rectification in service tax demand rejected where proviso to Section 73 supported extended period notice.

A limitation challenge to a service tax demand was raised on the ground that the show cause notice was served beyond one year, but the notice was stated to have been issued under the proviso to Section 73 of the Finance Act, 1994 on allegations of suppression, fraud, collusion or wilful misstatement, which allows a five-year period. The demand had already been confined to the normal period in the final order, and no patent error or mistake apparent on the record was shown. The rectification request was therefore rejected and the application was dismissed.

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Issues: Whether the show cause notice and consequent demand were barred by limitation, and whether there was any mistake apparent on record in the final order warranting rectification.

Analysis: The application for rectification was founded on the plea that the notice was served beyond one year and, therefore, the demand for the normal period could not survive. The Revenue's case was that the notice had been issued by invoking the proviso to Section 73 of the Finance Act, 1994 on allegations of suppression, fraud, collusion or wilful misstatement, which permitted demand within five years. The demand had already been confined to the normal period in the final order, and the record did not disclose any patent error.

Conclusion: The limitation objection was rejected and no mistake apparent on record was found; the rectification application was dismissed.

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