Tribunal Overturns Service Tax Demand for 2015-16; Faults Extended Limitation Invocation After Prior Clearance.

The Tribunal set aside the service tax demand for FY 2015-16 against the appellant, citing improper invocation of the extended period of limitation. The department had previously issued a NO DUE certificate in 2016 after scrutinizing the appellant's records, which contradicted the later Show Cause Notice issued in 2021 based on the same ITR findings. The Tribunal concluded that the department failed to establish suppression, a requirement for invoking the extended limitation period, and allowed the appeal with consequential benefits.

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Issues involved:
The issues in this case involve the confirmation of service tax demand for FY 2015-16 based on a difference in ST 3 return versus ITR filed by the Appellant, and the invocation of the extended period of limitation for raising the demand.

Confirmation of service tax demand:
The appellant filed an appeal against the adjudication Order-in-Original confirming the demand of service tax for FY 2015-16 due to a variance in ST 3 return and ITR filings. The department issued a Show Cause Notice (SCN) based on the ITR filed for that financial year. The appellant contended that being engaged in government contracts, it was not required to be registered with the service tax department, supported by a NO DUE CERTIFICATE received in 2016. The appellant argued that the demand for FY 2015-16 could not be sustained as the department was already aware of the business activities, citing the judgment of NIZAM SUGAR FACTORY. Additionally, the appellant relied on various tribunal decisions to support the claim that no demand can be raised by invoking the extended period of limitation for differences in ST 3 and ITR returns.

Invocation of extended period of limitation:
The Tribunal found that the service tax department had scrutinized the appellant's business for FY 2015-16, issuing a NO DUE certificate in 2016 based on ITR filings. The issuance of a subsequent SCN in 2021 based on the same ITR findings was deemed unsustainable as the department was already aware of the appellant's activities and had previously given a no due certificate. The Tribunal noted that for the invocation of the extended period of limitation, suppression had to be established, which was not done by the revenue in this case. Despite the appellant's non-appearance in the adjudication proceedings, the certificate issued by the department in 2016 indicated that the records were already scrutinized, leading to the decision to set aside the impugned order on grounds of limitation, allowing the appeal with consequential benefits as per law.

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