Extended limitation for service tax demands requires intent to evade, not a mere technical compliance lapse.

Extended limitation under the Finance Act, 1994 can be invoked only on proof of fraud, collusion, wilful misstatement, suppression of facts, or deliberate contravention with intent to evade service tax. On the facts noted, the bank had maintained separate accounts, was newly subject to service tax compliance, and had furnished branch-wise details; the lapse was treated as technical and reasonable cause was found for delayed return filing. As a result, the extended period was unavailable to the Revenue and the penalty-based demand could not be sustained.

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Issues: Whether the extended period of limitation and consequential penalty could be invoked for alleged irregular availment of CENVAT credit and delayed filing of returns by the respondent-bank.

Analysis: Section 73(1) of the Finance Act, 1994 permits recovery within the extended period only where non-payment or short-payment is occasioned by fraud, collusion, wilful misstatement, suppression of facts, or contravention of the provisions with intent to evade payment of service tax. The record showed that the respondent-bank had maintained separate accounts for service tax and education cess, was newly subject to service tax compliance, and had furnished details from its branches. Both the Commissioner and the Tribunal found absence of any deliberate intent to evade tax and treated the lapse as technical, with reasonable cause shown for the delay in filing returns.

Conclusion: The extended period was not available to the Revenue and the penalty-based demand could not be sustained; the assessee succeeded.

Ratio Decidendi: The extended limitation under Section 73 of the Finance Act, 1994 applies only on proof of fraud, suppression, wilful misstatement, or similar culpable conduct with intent to evade tax, and not for a mere technical or bona fide compliance lapse.

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