Limitation for service tax demand failed where prior audit raised no objection and suppression was not established.

Service tax demand was held time-barred because the department had already audited the relevant periods and the audit report recorded no objection of short payment or non-payment. A show cause notice issued after the normal limitation period could not be saved by the extended period in the absence of suppression. The Larger Bench ruling cited by the revenue was found inapplicable on the facts because it did not consider the effect of a prior audit. The demand was therefore unsustainable and relief was granted to the assessee.

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Issues: Whether the service tax demand was barred by limitation when the audit for the relevant period had already been conducted and no objection regarding short payment or non-payment was raised, and whether invocation of the extended period was justified.

Analysis: The relevant period was 2012-13 and 2013-14, while audit had been undertaken on 28.03.2014 and 02.04.2014. The audit report did not record any objection of short payment or non-payment of service tax. The show cause notice was issued on 21.04.2017, beyond the normal limitation period. In the absence of suppression, the extended period was held to be unavailable. The reliance placed on the Larger Bench decision was found inapplicable on the facts, because the effect of prior audit was not considered there.

Conclusion: The demand was held to be time-barred and unsustainable; the impugned order was set aside and relief followed in favour of the assessee.

Final Conclusion: The adjudication turned on limitation alone, and the service tax demand did not survive because the notice was issued beyond the permissible period without established suppression.

Ratio Decidendi: Where the department had already conducted audit for the relevant period and recorded no objection, a later show cause notice issued beyond the normal limitation period cannot be sustained on the basis of the extended period absent suppression.

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