Extended period of limitation cannot be invoked without proper investigation under Section 11A(4) Central Excise Act

CESTAT Chandigarh allowed the appeal, holding that the extended period of limitation could not be invoked as the show cause notice was issued in March 2015 based solely on audit objections from June 2011, without proper investigation or satisfying requirements under Section 11A(4) of Central Excise Act, 1944. The tribunal found that services provided to CPWD and Airport authority constituted works contract services exempt from service tax, not erection/commissioning/installation services as claimed by the department. The demand was barred by limitation and unsustainable on merits.

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Issues Involved:
1. Invocation of extended period of limitation.
2. Liability to pay service tax under the category of Erection, Commissioning or Installation service.
3. Imposition of penalties under Sections 76 and 78 of the Finance Act.

Summary:

1. Invocation of Extended Period of Limitation:
The Tribunal examined whether the extended period of limitation could be invoked based on audit objections without further investigation. The relevant provisions of Section 11A of the Central Excise Act were discussed, highlighting that the suppression of facts must be deliberate to evade payment of duty. The Tribunal cited several Supreme Court decisions, including Pushpam Pharmaceuticals and Anand Nishikawa Co. Ltd., which clarified that mere non-payment or omission does not amount to suppression unless it is deliberate. The Tribunal concluded that the entire demand was barred by limitation as the department failed to prove deliberate suppression of facts.

2. Liability to Pay Service Tax:
The Tribunal addressed whether the appellant was liable to pay service tax under the category of Erection, Commissioning or Installation service. The appellant argued that their services to CPWD and Airport Authority were in the nature of works contract and exempted from service tax. The Tribunal referred to Section 65(105)(zzzza) of the Finance Act, 1994, which excludes works contracts related to airports from service tax. The Tribunal also cited the Board's Circular No. 116/10/2009-ST and decisions in cases like Goa Friends Engineering & Electricals (P.) Ltd. and Shree Mohangarh Construction Co., which supported the appellant's claim. The Tribunal held that the services provided were indeed works contracts and exempt from service tax.

3. Imposition of Penalties:
Regarding the imposition of penalties under Sections 76 and 78 of the Finance Act, the Tribunal noted the appellant's bona fide belief that their services were exempt. The Tribunal referenced the decision in Commissioner of C.Ex. Ludhiana Vs. Pannu Property Dealers and invoked Section 80 of the Finance Act to drop the penalties, acknowledging the appellant's genuine belief in their exemption status.

Conclusion:
The Tribunal set aside the impugned order, holding that the demand was barred by limitation and the services provided were exempt from service tax. The appeal was allowed with consequential relief as per law.

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