Extended limitation cannot be invoked for reverse charge service tax demand when the dispute was already disclosed to the department.

Extended limitation could not be invoked for a service tax demand under reverse charge on services received from outside India because the assessee had already disclosed its stand to the department, and the dispute arose from material available in audit and regular books of account. On those facts, the department was held to have prior knowledge of the issue before issuance of the show cause notice, so the notice was time-barred and not maintainable.

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Issues: Whether the show cause notice demanding service tax under reverse charge mechanism on services received from outside India was barred by limitation.

Analysis: The appellant had taken a categorical stand before the department on 06.03.2014 that it was not liable to pay service tax on services received from outside India, and the demand was based on information available from audit and the regular books of account. In these circumstances, the department was already aware of the dispute much before the notice dated 16.10.2015. The record did not support invocation of the extended period of limitation.

Conclusion: The show cause notice was held to be time-barred and not maintainable.

Ratio Decidendi: Where the assessee has disclosed its stand to the department and the demand is founded on material available from audit and regular records, the extended period of limitation cannot be invoked.

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