Service tax demand for rent-a-cab services fails due to limitation period violation without proving suppression

The CESTAT NEW DELHI allowed the appeal challenging service tax demand for rent-a-cab services. The tribunal held that the extended five-year limitation period under section 73(1) proviso of the Finance Act could not be invoked without establishing suppression of facts, fraud, or willful misstatement. Since the show cause notice was issued beyond the normal one-year limitation period without invoking the proviso, and the department had prior knowledge through earlier notices and public documents like profit and loss accounts, no suppression could be established. The demand was time-barred.

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Issues:
- Appeal against order confirming demand of service tax
- Invocation of extended period of limitation under section 73(1) of the Finance Act

Analysis:

1. The appeal was filed to challenge the order confirming the demand of service tax from April 2012 to March 2013. The appellant argued that the show cause notice was issued beyond the stipulated period under the proviso to section 73(1) of the Finance Act.

2. The show cause notice demanded service tax under "rent-a-cab service", "renting of immovable property", and income from tuition fees. The appellant contended that the notice was issued on 22.10.2014, which was beyond the prescribed time limit.

3. The appellant argued that the extended period of limitation should not have been invoked as the facts were known to the department. The appellant cited judgments to support the contention that the notice was issued beyond the statutory period.

4. The Joint Commissioner and the Commissioner (Appeals) did not address the appellant's argument regarding the invocation of the extended period of limitation.

5. Section 73(1) of the Finance Act allows the Central Excise Officer to serve a notice within one year from the relevant date for recovery of service tax not levied or paid. The relevant date is defined under section 73(6) of the Act.

6. The proviso to section 73(1) allows for an extended period of five years in cases of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade payment of service tax.

7. The appellant contended that there was no suppression of facts and that the department had the necessary information from public documents such as the profit and loss account and balance sheet.

8. Previous judgments were cited to support the argument that when information is available in public documents, there is no suppression of facts to evade payment of tax.

9. The Tribunal held that the extended period of limitation was not applicable in this case, as there was no intent to evade payment of service tax. The order confirming the demand was set aside, and the appeal was allowed.

10. The judgment was pronounced on 04.12.2024, granting relief to the appellant based on the non-invocation of the extended period of limitation under the Finance Act.

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