Limitation in service tax demand: filing of returns and departmental verification defeated extended period and suppression.

Service tax demand for April 2004 to June 2005 was held barred by limitation because the assessee had filed ST-3 returns, had earlier paid service tax, and the departmental verification on surrender of registration recorded no pending or contemplated tax liability. On those facts, the Revenue already had the relevant material and failed to show a sufficient basis for invoking the extended period on an allegation of suppression. The demand was therefore treated as time-barred and the consequential penalties were set aside.

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Issues: Whether the demand of service tax and the penalties imposed for the period April 2004 to June 2005 were barred by limitation in view of the facts on record.

Analysis: The appellant had filed ST-3 returns and had earlier paid service tax. The record also showed that, when the registration was surrendered, the departmental verification noted that no demand or tax liability was pending or contemplated against the assessee. In these circumstances, the Revenue had the relevant material available and no sufficient basis was shown for invoking the extended period on the allegation of suppression.

Conclusion: The demand was held to be time-barred and the consequential penalties were set aside.

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