Extended limitation and notice-bound adjudication barred service tax demand where intent to evade was not shown.

Extended limitation for service tax under section 73 requires proof of fraud, collusion, wilful misstatement or suppression of facts with intent to evade tax; mere non-disclosure or audit detection, without deliberate intent, is insufficient, so the extended-period demand could not stand. A demand for the post-01.07.2012 period also cannot be sustained where the show cause notices proceeded only on mining service under the pre-negative list regime, because adjudication cannot travel beyond the notice and confirm tax on a different legal basis. The service tax demand, interest and penalties were set aside in full.

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Issues: (i) Whether the extended period of limitation could be invoked for the service tax demand on the basis of alleged suppression of facts. (ii) Whether the demand for the post-01.07.2012 period could be confirmed when the show cause notices proceeded only on the basis of mining service under the pre-negative list regime.

Issue (i): Whether the extended period of limitation could be invoked for the service tax demand on the basis of alleged suppression of facts.

Analysis: The extended period under section 73 of the Finance Act, 1994 can be invoked only where non-payment or short payment is attributable to fraud, collusion, wilful misstatement, suppression of facts, or similar conduct with intent to evade tax. Mere omission or non-disclosure, without proof of deliberate intent, is insufficient. The notices relied only on the allegation that the taxable value was not reflected in the ST-3 returns and that the short payment came to light during audit. Those allegations, by themselves, did not establish the requisite intent to evade. The records were available with the department and the returns had been filed, so the factual basis for invoking the extended period was not made out.

Conclusion: The extended period of limitation was not invokable and the demand falling in the extended period could not be sustained.

Issue (ii): Whether the demand for the post-01.07.2012 period could be confirmed when the show cause notices proceeded only on the basis of mining service under the pre-negative list regime.

Analysis: The notices proposed demand only under the head of mining service and did not put the appellant to notice on the legal basis applicable after introduction of the negative list regime from 01.07.2012. The impugned order, however, sustained the demand for the post-01.07.2012 period by invoking section 66B of the Finance Act, 1994 on the reasoning that the services were neither in the negative list nor exempted. Since an adjudicating authority cannot travel beyond the scope of the show cause notice, confirmation of demand on a basis not stated in the notices was impermissible.

Conclusion: The post-01.07.2012 demand was unsustainable because it was confirmed on a ground not pleaded in the show cause notices.

Final Conclusion: The service tax demand, along with interest and penalties, was set aside in full, with consequential relief to the appellant.

Ratio Decidendi: Extended limitation requires proof of deliberate suppression or equivalent culpable conduct, and an adjudication cannot sustain a demand on a legal basis not contained in the show cause notice.

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