Extended limitation for service tax fails when demand rests on 26AS data without proper inquiry or proof of suppression.

Extended limitation for service tax could not be invoked where the demand rested mainly on 26AS data and sample invoices, and the Department failed to conduct adequate verification of the assessee's address, records, or the nature of services rendered. Mere third-party financial data, without meaningful inquiry or corroborative evidence, was insufficient to sustain a best judgment assessment. The record also disclosed no positive material showing wilful suppression, misstatement, or intent to evade tax, which are necessary to justify the extended period. As a result, the demand and penalties could not be sustained on limitation, while the merits were left undecided.

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Issues: Whether the extended period of limitation could be invoked for service tax demand founded substantially on 26AS data and whether the demand could be sustained on best judgment assessment without proper investigation and corroborative evidence.

Analysis: The demand was based on information received from the Income Tax Department and the record showed that the Department proceeded without undertaking adequate verification of the appellant's address, business records, or the nature of taxable services rendered. The Court found that mere reliance on 26AS data and sample invoices, without a meaningful inquiry, was insufficient to justify best judgment assessment. It also found no positive material in the show cause notice to establish wilful suppression, misstatement, or intent to evade duty, which are necessary for invoking the extended period. In the absence of reliable evidence to displace the appellant's defence that it was a GTA service provider and that the correct taxability could not be conclusively determined on the available record, the benefit of doubt went to the appellant.

Conclusion: The extended period of limitation was not invocable, and the appeal succeeded on limitation; the merits were left undecided.

Final Conclusion: The service tax demand and penalties could not be sustained because the Department failed to establish the jurisdictional basis for extended limitation and did not conduct the investigation required before resorting to best judgment assessment.

Ratio Decidendi: Extended limitation cannot be invoked for a demand built mainly on third-party financial data unless the Department establishes, through proper investigation and evidence, deliberate suppression or intent to evade tax.

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