Extended limitation for service tax on foreign exhibition payments rejected where no suppression with intent; demands set aside

Whether the extended limitation period for service tax demands applies where payments in foreign exchange were made for exhibition services and, if treated as duty-paid, would have conferred Cenvat credit. The legal basis applied is that suppression must be accompanied by intent to evade to invoke the extended period; on the facts there was no such intent and the alleged suppression did not justify extension. Consequence: the extended limitation period was held inapplicable and the service tax demands were set aside as unsustainable.

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Issues: Whether the extended period of limitation for service tax demands could be invoked by Revenue on the ground of suppression in respect of payments made in foreign exchange for exhibition services, where receipt of such payments, if treated as duty-paid, would have entitled the appellant to Cenvat credit.

Analysis: The matter concerns whether factual suppression existed and whether suppression was accompanied by intent to evade so as to justify invocation of the extended period. The payments were for services rendered abroad and, on the facts, payment of the alleged duty would have given the appellant entitlement to Cenvat credit as a running concern. Applying the legal principle that suppression unaccompanied by intent to evade does not justify extending the limitation period, the extended period was found inapplicable on these facts.

Conclusion: The extended period of limitation cannot be invoked; there is no suppression coupled with intent to evade; the demands are not sustainable and are set aside in favour of the assessee.

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