Limitation barred service tax demand on subcontracted chartered accountant services where circular support and prior notices showed bona fide belief.

Service tax demand on chartered accountant services supplied by a sub-contractor was held time-barred because the dispute concerned limitation, not taxability. A prevailing circular supported the assessee's bona fide belief that no separate tax was payable where the main contractor had discharged tax on the gross value. Earlier show cause notices on the same service also showed departmental awareness of the issue, so the extended period could not be invoked again for a later period on identical facts. The demand was therefore unsustainable.

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Issues: Whether the demand of service tax on chartered accountant services provided by a sub-contractor was barred by limitation and, therefore, unsustainable.

Analysis: The demand was not contested on taxability and the dispute turned on limitation. The relevant circular in force supported the view that a sub-contractor was not required to pay service tax where the main contractor discharged tax on the gross value, which supported the appellant's bona fide belief. The same activity had also been the subject of earlier show cause notices, making the department aware of the nature of the service and weakening any basis for invoking the extended period. The principle that the extended period cannot be invoked for a subsequent period on the same issue once notices have already been issued was applied.

Conclusion: The demand was hit by limitation and could not be sustained.

Ratio Decidendi: Where the department has already issued show cause notice on the same issue and the assessee acted under a bona fide belief supported by a prevailing circular, the extended period of limitation cannot be invoked for a subsequent period on identical facts.

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