Customs Tribunal decision upheld by Bombay HC, extended limitation period not applicable

The Bombay High Court upheld the decision of the Customs, Excise and Service Tax Appellate Tribunal, ruling that the extended period of limitation under Section 78(1) of the Finance Act, 1994 did not apply to the case. The Court found that the respondent had informed the Department in 2006 about not being liable to pay service tax on a specific levy, and therefore, there was no suppression of facts justifying the extended period. As a result, the Court dismissed the appeal, stating that the issue did not raise a substantial question of law.

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Issues:
Challenge to order under Section 83 of the Finance Act, 1994 and Section 35G of the Central Excise Act, 1944 regarding the extended period of limitation under Section 78(1) of the Finance Act, 1994.

Analysis:
The appeal before the Bombay High Court challenged the Customs, Excise and Service Tax Appellate Tribunal's order dated 7th May 2018. The main issue raised was whether the Tribunal was justified in holding that the extended period of limitation under Section 78(1) of the Finance Act, 1994 would not apply. The respondent, a Manpower Recruitment or Supply Agency Services provider, had paid service tax on wages to employees and collected a 41% levy from the contractee, deposited with Grocery Markets and Shop Board. The respondent had informed the Department in September 2006 that the 41% levy was not part of taxable value for service tax payment.

The Revenue issued a Show Cause Notice in 2012 to recover service tax on the 41% levy collected by the respondent from January 2007 to November 2009, alleging suppression. However, the Tribunal found that the respondent had informed the Department in 2006 about not being liable to pay service tax on the 41% levy. The Tribunal held that there was no suppression by the respondent, and thus, the demand was barred by limitation. The appellant argued that the 2006 letter does not absolve the respondent from suppression of facts for invoking the extended period of limitation.

The High Court noted that the Department was aware of the respondent's declaration before the period for which the demand was raised. Therefore, the finding of the Tribunal that there was no suppression to invoke the extended period of limitation was not considered unreasonable. The Court concluded that the proposed question did not raise a substantial question of law and dismissed the appeal.

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