Reverse charge valuation for warehouse repairs must follow the applicable works contract notifications; extended limitation needs proof of suppression.

Reverse charge valuation for warehouse repair works contracts had to be computed by applying Notification No. 30/2012-ST with Notification No. 11/2014, which specified tax on 70% of the amount charged for maintenance or repair of immovable property; the departmental computation ignored that later valuation rule, so the demand failed. The extended limitation period and penalty were also unavailable because no suppression, concealment, or wilful evasion was shown, and tax with interest had already been paid. The demand, interest, and penalty were therefore set aside.

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Issues: (i) Whether, on the facts of repair services received for the warehouse, the service tax demand under reverse charge was correctly worked out under Notification No. 30/2012-ST dated 20.06.2012 read with Notification No. 11/2014 dated 11.07.2014; (ii) Whether the extended period of limitation and penalty were invocable in the absence of suppression or wilful evasion.

Issue (i): Whether, on the facts of repair services received for the warehouse, the service tax demand under reverse charge was correctly worked out under Notification No. 30/2012-ST dated 20.06.2012 read with Notification No. 11/2014 dated 11.07.2014.

Analysis: The service recipient had received works contract services for repair of its warehouse. Notification No. 30/2012-ST provided for equal liability of service provider and service recipient in respect of the service portion in execution of works contract. Notification No. 11/2014 further specified that, for works contract involving maintenance or repair of immovable property, service tax was payable on 70% of the total amount charged, leaving 30% as the recipient's share when read with the reverse charge notification. The departmental computation ignored this later notification and proceeded on an incorrect basis.

Conclusion: The demand was not sustainable and is held to be against the assessee.

Issue (ii): Whether the extended period of limitation and penalty were invocable in the absence of suppression or wilful evasion.

Analysis: No material was shown to establish suppression of facts, positive act of concealment, or mens rea. The tax had already been discharged along with interest. In these circumstances, invocation of the extended period was unwarranted and the notice could not be sustained on limitation.

Conclusion: The extended period was wrongly invoked and the issue is decided in favour of the assessee.

Final Conclusion: The demand, interest, and penalty were set aside and the appeal succeeded.

Ratio Decidendi: Where the applicable reverse charge and valuation notifications are not correctly applied to works contract repair services, and the department fails to establish suppression or wilful evasion, the demand cannot be sustained and the extended limitation period cannot be invoked.

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