Extended limitation in service tax fails where prior audit raised no objection and later audit alone cannot prove suppression.

Extended limitation for service tax could not be invoked where the department had already audited the same records for the relevant period and raised no objection, because a later audit alone did not establish suppression or misstatement by the assessee. The Tribunal treated the material facts as already within departmental knowledge through the first audit, so the statutory ingredients for the extended period were absent. The demand was therefore held time-barred and set aside, with relief granted to the assessee.

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Issues: Whether the demand of service tax was barred by limitation and whether the extended period could be invoked on the basis of a second audit when the earlier audit had not raised any objection.

Analysis: The demand arose after a second audit covering the same assessee, whereas the earlier audit for the prior period had not led to any objection on the disputed liability. The Tribunal noted that the relevant facts were already within the department's knowledge through the first audit and that the assessee could not be treated as having suppressed material facts merely because a later audit took a different view. In such circumstances, the ingredients necessary for invoking the extended period of limitation were absent.

Conclusion: The extended period of limitation was not available to the Revenue, and the demand was set aside as time-barred in favour of the assessee.

Final Conclusion: The appeal succeeded because the show cause notice and the resulting demand could not survive the limitation challenge, with consequential relief granted to the assessee.

Ratio Decidendi: Where the department has already audited the records for the relevant period and no objection was raised, a second audit alone cannot establish suppression or misstatement so as to justify invocation of the extended period of limitation.

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