Extended limitation cannot rest on alleged suppression where no statutory tax liability existed during the relevant period.

A demand for service tax on a recipient of goods transport service could not be sustained by invoking the extended period of limitation where the alleged suppression rested only on non-payment of tax and non-filing of returns during a period when no statutory liability to pay existed. The second show cause notice also covered the same period as an earlier notice, which weakened the basis for alleging suppression. Retrospective amendments and validation provisions did not cure the absence of the ingredients required to extend limitation on these facts. The demand was therefore barred by limitation and could not be sustained.

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Issues: Whether the demand of service tax on the recipient of goods transport service could be sustained by invoking the extended period of limitation on the allegation of suppression of facts, despite the earlier show cause notice and the retrospective amendments validating levy and recovery.

Analysis: The proceedings arose from a second show cause notice for the same period already covered by an earlier notice. The liability of the recipient to pay service tax was not in force during the relevant period, and the allegation of suppression was founded only on non-payment of tax and non-filing of returns. In the absence of a statutory obligation during the relevant period, such conduct could not constitute suppression for the purpose of extending limitation. The retrospective amendments and validation provisions did not cure the absence of ingredients necessary to invoke the extended period on the facts of the case.

Conclusion: The demand was barred by limitation and could not be sustained.

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