Suppression of facts and extended limitation cannot be invoked where non-payment was disclosed to the department.

CESTAT Kolkata held that the service tax demand was time-barred because the assessee had disclosed non-payment of tax on GTA services through a departmental letter and nil returns, and the department took no action for several years. On those facts, there was no material to establish suppression of facts with intent to evade tax, so invocation of the extended period of limitation was unjustified. As the demand failed on limitation, the related interest and penalties also could not survive and were set aside.

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Issues: Whether the service tax demand for the periods in question was barred by limitation on account of absence of suppression of facts with intent to evade tax.

Analysis: The appellant had informed the department through its letter dated 26.10.2007 that it was not paying service tax on GTA services and had also filed nil returns. No action was taken by the department on that intimation, and the show cause notice was issued only on 15.10.2012 for earlier periods. On these facts, the record did not establish suppression of facts with intent to evade tax, and invocation of the extended period of limitation was not justified. Once the demand itself failed on limitation, the associated demand of interest and penalties could not survive.

Conclusion: The demand was held to be barred by limitation and was set aside in favour of the assessee.

Ratio Decidendi: Where the assessee has disclosed the non-payment of service tax to the department and there is no material to prove suppression with intent to evade, the extended period of limitation cannot be invoked.

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