Service tax valuation and limitation: security personnel wages were taxable, but absence of suppression defeated the extended-period demand.

Salaries and wages paid to security personnel were treated as part of the taxable value for service tax purposes, following prior Tribunal authority, so the valuation issue was decided against the assessee. However, the demand could not be sustained beyond the normal limitation period because suppression of facts was not established. On that basis, the extended-period demand failed and the penalty was also unsupported. The service tax demand was therefore set aside notwithstanding the adverse finding on valuation.

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Issues: (i) Whether salaries and wages paid to security personnel were includible in the value for computation of service tax liability. (ii) Whether the demand of service tax was sustainable in view of limitation and the finding that there was no suppression of facts.

Issue (i): Whether salaries and wages paid to security personnel were includible in the value for computation of service tax liability.

Analysis: The issue on merits had already been settled against the assessee by a prior Tribunal decision holding that such amounts formed part of the taxable value for service tax purposes.

Conclusion: The issue was decided against the assessee.

Issue (ii): Whether the demand of service tax was sustainable in view of limitation and the finding that there was no suppression of facts.

Analysis: The finding that the assessee was not guilty of suppression meant that the demand could not be sustained beyond the normal period of limitation. The absence of suppression also supported the setting aside of penalty.

Conclusion: The demand was held to be time-barred and unsustainable against the assessee.

Final Conclusion: Although the valuation issue was decided against the assessee, the demand failed on limitation, and the appeal was allowed with the service tax demand set aside.

Ratio Decidendi: Where suppression is not established, a demand cannot be sustained beyond the normal period of limitation merely on the basis of an extended-period invocation.

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