Extended limitation for service tax demand failed where taxability was disputed and bona fide belief negated suppression.

The extended-period service tax demand on terminal handling charges and allied receipts was unsustainable because the amounts were linked to cargo-space booking incentives, reimbursable expenses, and other charges whose taxability had been under dispute. The record did not clearly establish the precise basis for taxing the receipts under Business Auxiliary Service, and the assessee's bona fide belief that they were not taxable was accepted. As the ingredients for suppression or intent to evade were not proved, invocation of the extended limitation period failed and the Revenue's appeal was rejected.

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Issues: Whether the demand of service tax on terminal handling charges and allied amounts for the extended period was sustainable, and whether suppression or intent to evade could be inferred so as to justify invocation of limitation.

Analysis: The disputed amounts were found to be linked to cargo-space booking incentives, reimbursable expenses, and charges whose taxability had been under litigation. The record also showed that the show cause notice and adjudication lacked clarity on the precise basis for taxing these receipts under Business Auxiliary Service. In these circumstances, the assessee's bona fide belief that the amounts were not taxable was accepted, and the ingredients necessary for invoking the extended period were not established.

Conclusion: The demand for the extended period was rightly set aside and the appeal by Revenue failed.

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