Tribunal overturns service tax demand, citing compliance with statutory provisions.

The Tribunal set aside the confirmed service tax demand against the appellant, ruling that the extended period of limitation could not be invoked as the appellant had complied with statutory provisions. The appellant's trading activities were considered exempted services until a specific date, and as a registered assessee who timely filed returns, the Tribunal found no basis for the demand. The appeal was allowed in favor of the appellant, and the impugned order was overturned.

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Issues:
Service Tax demand confirmed for using common input services for taxable and exempted services without maintaining separate accounts. Invocation of extended period of limitation for confirming the demand.

Analysis:
In this case, the appellant was held liable for not maintaining separate accounts of input services used for providing both taxable and exempted services, resulting in the confirmation of the adjudged demand by the Commissioner (Appeals). The Department contended that the appellant should have followed Rule 6(2) and Rule 6(3) of the Cenvat Credit Rules, 2004. The appellant argued that trading activities were considered exempted services until 30.06.2012 as per Section 66 D of the Finance Act, 1994. The appellant's consultant cited the case of BCH Electric Ltd. Vs. Commissioner of Central Excise, Delhi-IV to support the argument that since the appellant had complied with statutory provisions, the extended period of limitation could not be invoked.

The dispute centered on whether trading activities should be classified as exempted services, which was a contentious issue. The Finance Act, 1994, as amended by the Finance Act, 2012, included trading in the list of exempted services. Therefore, the Tribunal concluded that allegations of suppression or misstatement could not be made against the appellant for invoking the extended period of limitation. The Tribunal noted that the appellant was a registered assessee who had complied with statutory requirements, including timely filing of returns. As a result, it was determined that the Show Cause Notice (SCN) issued with the extended period of limitation was time-barred, and the confirmed demand against the appellant could not be sustained on the grounds of limitation.

Consequently, the Tribunal found no merit in upholding the adjudged demand against the appellant based on limitation. The impugned order was set aside, and the appeal was allowed in favor of the appellant. The decision was pronounced in open court, favoring the appellant in this matter.

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