Extended limitation cannot be invoked where tax liability on dealer commission was already clarified and returns were regularly filed.

The departmental circular clarified that an automobile dealer arranging vehicle finance renders a taxable Business Auxiliary Service and that service tax is payable on the gross commission received from the finance company, not merely on the net amount retained after sharing commission with customers. Because the assessee had regularly filed ST-3 returns and the show cause notice was issued after the tax position had already been clarified, there was no suppression or comparable factual basis to invoke the extended period of limitation. The demand was therefore barred by limitation and the appeal succeeded.

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Issues: Whether the extended period of limitation could be invoked for demanding service tax on commission received by an automobile dealer for arranging finance, in view of the departmental circular clarifying that tax was payable on the gross commission amount.

Analysis: The circular clarified that automobile dealers who promote the services of banks or finance companies by arranging vehicle loans render a taxable Business Auxiliary Service, and that service tax is payable on the gross commission received from the financial company, not on the amount retained after sharing part of the commission with customers. The appellant had been filing ST-3 returns regularly and paying tax, and the show cause notice was issued after the circular had already explained the tax position. In those circumstances, the issue was not one involving suppression or other facts justifying invocation of the extended period.

Conclusion: The extended period of limitation was not invokable, the demand was barred by limitation, and the appeal succeeded.

Ratio Decidendi: Where the relevant tax position has already been clarified by a departmental circular and the assessee has been regularly filing returns, the extended period cannot be invoked merely to raise a demand on the same issue.

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