Suppression of taxable receipts defeats limitation defence; service tax demand stands, while Section 76 penalty was deleted.

Service tax demand was held not barred by limitation because the appellant had collected tax but failed to deposit it and also understated the taxable receipts in ST-3 and income tax returns, showing suppression and mala fide intent. On penalties, the adjudicating view was applied issue-wise: the penalty under Section 76 was set aside in the overall facts and circumstances, while the penalties under Sections 77 and 78 were sustained along with the confirmed tax demand and interest.

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Issues: (i) Whether the demand of service tax was barred by limitation. (ii) Whether the penalties imposed under Sections 76, 77 and 78 of the Finance Act, 1994 were sustainable.

Issue (i): Whether the demand of service tax was barred by limitation.

Analysis: The appellant had collected service tax but did not deposit it with the Government. The receipts were also not correctly disclosed in the ST-3 returns and income tax returns. These facts established mala fide intention and suppression of the taxable receipts, defeating the plea of time bar.

Conclusion: The demand was not barred by limitation and was upheld.

Issue (ii): Whether the penalties imposed under Sections 76, 77 and 78 of the Finance Act, 1994 were sustainable.

Analysis: In view of the overall facts and circumstances, the penalty under Section 76 was set aside, while the remaining penalties were sustained along with the confirmed service tax demand and interest.

Conclusion: The penalty under Section 76 was set aside, and the penalties under Sections 77 and 78 were upheld.

Final Conclusion: The appeal succeeded only to the limited extent of deletion of the penalty under Section 76, while the service tax demand, interest, and the other penalties remained confirmed.

Ratio Decidendi: Where taxable receipts are collected but not deposited and are not properly disclosed in statutory returns, mala fide intention and suppression are established, defeating a limitation defence; penalties may still be re-evaluated issue-wise on the facts.

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