2025 (7) TMI 1143 - AT - Service Tax

Second show cause notice set aside as time-barred when based on same facts as first notice without fresh suppression

The CESTAT Allahabad held that the second SCN dated 08.10.2021 was unsustainable on limitation grounds. Both SCNs were issued based on third-party data ... Sustainability of the second SCN - SCN issued on the basis of third party data - Invocation of extended period of limitation - HELD THAT:- Both the SCNs dated 29.12.2020 and 08.10.2021 have been issued on the basis of third party data provided by Income Tax Department and the demand is based on differential value provided by Income Tax Department vis-à- vis gross taxable value shown in ST-3 Returns. It is also found that the Appellant is engaged in activity of selling of space and both the SCNs pertain to the gross amount received on account of sale of space for advertisement in print media which is evident by the observation of the Adjudicating Authority. When all the relevant facts were in the knowledge of the Adjudicating Authority, since the first SCN was issued and, similar facts could not be taken as suppression of facts on the part of the Appellant. The Appellant has been filing ST-3 Returns, therefore, cannot be held liable for misleading the authorities or suppressing the information from the Department - it is further found that the second SCN dated 08.10.2021 issued solely on the basis of ITR and 26AS is not sustainable on limitation in as much as Revenue’s entire case is based on Third Party Data under which service tax has been confirmed by invoking the longer period of limitation. Thus, the demand initiated vide SCN dated 08.10.2021 is not sustainable and liable to be set aside - appeal allowed. ISSUES: Whether a subsequent Show Cause Notice (SCN) issued for a later period is sustainable when the facts were already known to the Department at the time of the first SCN.Whether invocation of extended period of limitation is permissible on the ground of suppression or concealment of facts when the Department had knowledge of the relevant facts at the time of the first SCN.Whether demands based solely on third party data (Income Tax Return and Form 26AS) can sustain service tax liability when returns have been regularly filed by the appellant. RULINGS / HOLDINGS: The subsequent SCN issued for the period 2016-17 is not sustainable as 'all the relevant facts were in the knowledge of the Adjudicating Authority' at the time of the first SCN for 2015-16, and therefore, the Department cannot invoke the extended period of limitation 'in the garb of suppression of concealment of facts.'The appellant, having filed ST-3 Returns regularly, 'cannot be held liable for misleading the authorities or suppressing the information from the Department.'The demand based solely on third party data provided by the Income Tax Department, invoking the longer period of limitation, is 'not sustainable on limitation' and liable to be set aside. RATIONALE: The Court applied settled legal principles relating to limitation and suppression of facts, relying on precedent that once a Show Cause Notice has been issued on a particular proposition, a second SCN invoking extended limitation period cannot be issued on the same facts.Decisions cited include the principle that the Department cannot 'plead suppression of fact' to justify extended limitation when the facts were already known, as held in prior Supreme Court and High Court rulings and consistent Tribunal decisions.The adjudication was based on reconciliation of gross receipts as per third party Income Tax data vis-à-vis ST-3 Returns, but the Court emphasized that knowledge of these facts at the time of the first SCN precludes extended limitation invocation.No dissenting or concurring opinions were noted; the judgment follows established doctrine on limitation and concealment.