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Issues: (i) whether the demand for service tax could be sustained by invoking the extended period of limitation; (ii) whether the commission received as a distributor was taxable where the amount was within the exemption limit under Notification No. 6/2005-ST.
Issue (i): whether the demand for service tax could be sustained by invoking the extended period of limitation.
Analysis: The demand for the earlier period was sought to be raised by invoking the extended period. The Tribunal followed its earlier view that mere non-registration, non-filing of returns, or non-declaration of activity does not by itself establish wilful suppression or deliberate contravention with intent to evade tax. It was also noted that the nature of the activity had been viewed differently in departmental proceedings, showing that the issue was debatable.
Conclusion: The extended period of limitation was not invocable and the demand for the time-barred period was unsustainable.
Issue (ii): whether the commission received as a distributor was taxable where the amount was within the exemption limit under Notification No. 6/2005-ST.
Analysis: For the remaining period within limitation, the commission received was only Rs. 1,209, which was far below the aggregate exemption threshold of Rs. 8 lakhs under Notification No. 6/2005-ST. On that basis, the taxable demand could not survive.
Conclusion: The commission was covered by the exemption and the demand was not sustainable.
Final Conclusion: The service tax demand was set aside in full, as the larger part was barred by limitation and the balance was covered by exemption.
Ratio Decidendi: The extended limitation period cannot be invoked absent wilful suppression or intent to evade, and a demand within the exemption threshold under the applicable notification is not sustainable.
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