Extended limitation for service tax demand rejected where sub-contractor liability was genuinely disputed and no suppression was proved.

Extended limitation for service tax demand was unsustainable where the assessee was registered, maintained proper books, and filed periodic returns. The dispute arose from sub-contractor services during a period of general controversy over whether tax liability lay with the sub-contractor or the principal contractor. In the absence of proof of wilful suppression, fraud, or deliberate non-compliance, the extended period could not be invoked and the demand was barred by limitation.

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Issues: Whether the show cause notice invoking the extended period of limitation was sustainable in the facts of the case.

Analysis: The appellant was registered with the department, maintained proper books of account, and filed periodical returns. The dispute related to service tax on services rendered as a sub-contractor during a period when the liability of a sub-contractor vis-a -vis the principal contractor was a matter of general controversy. The record also indicated a bona fide understanding that the tax liability was to be discharged by the main contractor, and the department did not establish wilful suppression, fraud, or deliberate non-compliance.

Conclusion: The invocation of the extended period was not justified, and the demand was barred by limitation.

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