Limitation for service tax demand fails where exempt SEZ service value was disclosed and bona fide exemption belief existed.

Disclosure of the exempted SEZ service value in ST-3 returns negated any allegation of suppression, and the assessee's bona fide belief that subcontracted SEZ services were exempt under Notification No. 9/2009-ST, as amended, further showed no mala fide intent. On that basis, the extended period of limitation could not be invoked, so the service tax demand, with interest and penalty, was unsustainable and the impugned order was set aside in favour of the assessee.

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Issues: Whether the demand of service tax was barred by limitation in the absence of suppression of facts, when the appellant had disclosed the exempted service value in ST-3 returns and claimed exemption for services rendered in the SEZ.

Analysis: The appellant had declared in its ST-3 returns the value of the exempted service relating to services provided in the SEZ. The disclosure negatived any suppression of facts. The appellant also entertained a bona fide belief that services provided in the SEZ as a sub-contractor were exempt under Notification No. 9/2009-ST, as amended, and the record disclosed a prima facie case on merits. In these circumstances, the non-payment of service tax could not be attributed to any mala fide intent, and the extended period was not available.

Conclusion: The demand was held to be unsustainable on limitation, and the impugned order was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the assessee obtained full relief from the confirmed tax, interest, and penalty demand.

Ratio Decidendi: Where the assessee has disclosed the relevant exempted value in statutory returns and acts under a bona fide belief regarding exemption, suppression of facts and mala fide intent are not established, so the extended period of limitation cannot be invoked.

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