Bolpur Commissionerate Lacked Jurisdiction; Service Tax Demand Quashed Under Notification 25/2012 and Limitation Rules

The CESTAT Kolkata held that the Bolpur Commissionerate lacked territorial jurisdiction to issue the SCN as the appellant's service activities and registrations were under Kolkata Commissionerate. The appellant's services were exempt under Notification No. 25/2012 (Sl. Nos. 12, 12A, 13, and 29(h)), and no suppression of facts was found. The extended period of limitation could not be invoked since no new evidence of suppression was produced. The SCN issued beyond the normal limitation period was held invalid. Consequently, the demand of service tax, interest, and penalties confirmed in the impugned order were set aside. The appeal was allowed and the order quashed.

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ISSUES:

Whether the show cause notice issued by the Commissionerate lacking territorial jurisdiction is valid or void ab initio.Whether the appellant is entitled to exemption under Sl. Nos. 12, 12A, 13, and 29(h) of Exemption Notification No. 25/2012 dated 20.06.2012 for services rendered.Whether the extended period of limitation under Section 73 of the Finance Act, 1994, can be invoked for raising service tax demand based on data from the Income Tax Department and public documents like balance sheets and Form 26AS.Whether there was suppression of facts or wilful misdeclaration by the appellant warranting invocation of extended limitation period.Whether the demand of service tax along with interest and penalty confirmed in the impugned order is sustainable in law.

RULINGS / HOLDINGS:

The show cause notice issued by the Commissionerate without territorial jurisdiction is void ab initio, and demands confirmed on such notice are not sustainable under law.The appellant is entitled to exemption under Sl. Nos. 12, 12A, 13, and 29(h) of Exemption Notification No. 25/2012 for the services rendered, as these pertain to exempted activities such as road construction and construction of buildings predominantly for non-commercial use.The extended period of limitation under Section 73 of the Finance Act, 1994, cannot be invoked merely on the basis of data from the Income Tax Department or public documents like balance sheets and Form 26AS, absent any evidence of suppression or wilful misdeclaration.The appellant did not suppress any information or commit wilful misdeclaration; mere failure to declare does not amount to suppression, and thus extended limitation period provisions are not applicable.The demand of service tax along with interest and penalty confirmed in the impugned order is barred by limitation and is liable to be set aside; consequently, interest and penalty imposed are also set aside.

RATIONALE:

The territorial jurisdiction of the Principal Commissioner, CGST & Central Excise, Bolpur, extends only to specified districts and does not include the city of Kolkata; jurisdiction is conferred by law and cannot be assumed, rendering the notice issued without jurisdiction void ab initio.Exemption Notification No. 25/2012 exempts certain services including road construction and related consulting engineer services; the appellant's activities fall within these categories, supported by documentary evidence submitted but ignored by the adjudicating authority.Section 73 of the Finance Act, 1994, prescribes a maximum period of five years for raising demands; extended period can be invoked only upon proof of fraud or wilful suppression, which is absent here.Judicial precedents establish that data from Income Tax Department and public documents like balance sheets and Form 26AS do not constitute suppression or misdeclaration; positive act of concealment is required to invoke extended limitation.Reliance on authoritative decisions confirms that demands based on Income Tax data without evidence of suppression are barred by limitation, and penalties imposed without such proof are not sustainable.

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