Extended limitation in service tax demands fails where facts are disclosed and taxability remains a bona fide dispute.

Extended limitation for service tax could not be invoked because the taxpayer disclosed the relevant transactions in its records, responded to departmental correspondence and there was no material showing deliberate suppression, wilful misstatement or intent to evade tax. As the taxability of food and beverages was still under judicial scrutiny and the dispute was confined to a bona fide question of law, the demand remained within the normal period only. The show cause notice was therefore time barred, the demand failed on limitation, and the impugned order was set aside without reaching the merits.

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Issues: Whether the extended period of limitation could be invoked for the service tax demand, and whether the show cause notice was time barred.

Analysis: The demand related to a period during which the taxability of food and beverages was under active judicial scrutiny and the issue had not attained finality. The appellant had responded promptly to departmental correspondence, disclosed the relevant transactions in its records and statutory books, and had also discharged tax on certain items. The material on record showed that the Department already had access to the relevant information, and there was no basis to infer deliberate withholding of facts or a conscious intent to evade tax. In such circumstances, mere non-payment or a difference of view on taxability could not justify recourse to the extended limitation period.

Conclusion: The extended period of limitation was not invocable and the show cause notice was time barred.

Final Conclusion: The demand could not be sustained on limitation, and the impugned order was set aside without examination of the merits.

Ratio Decidendi: The extended period of limitation can be invoked only on proof of deliberate suppression, wilful misstatement, fraud, collusion, or comparable conduct with intent to evade tax; where the relevant facts are disclosed and the dispute is confined to a bona fide taxability controversy, the notice is confined to the normal period.

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