2025 (12) TMI 1611 - AT - Service Tax

Service tax payments and returns under wrong PAN, audit and income-tax data trigger time-bar dispute; demand set aside

The dominant issue was whether the service tax demand for Oct 2014-Mar 2015, raised by SCN dated 28.09.2020, was time-barred due to impermissible ... Recovery of service tax with penalties - receipt from services tax returns but no ST-3 returns were filed by the appellant - demand on the basis of third party data received from the Income Tax Department for the year 2014-15 - demand barred by time limitation or not - HELD THAT:- The period of dispute in the present case is from October 2014-March 2015 and the appellant has been paying the service tax though under the wrong PAN Number and has also been filing the Returns. The entire issue was raised during the audit of the accounts of the appellant for the period October 2010-March 2012 and the audit report was issued and it is mentioned in the audit report that M/s Singla Associates is a partnership firm vide registration number ABCFSV3669JST001 and PAN Number mentioned in the audit report is of the partnership concern - it is also found that the show cause notice was issued on the basis of audit report and third party data received from the income tax department on 28.09.2020 for recovery of service tax. The Tribunal has consistently held that when the demand is proposed on the basis of audit, extended period cannot be invoked as held by the Tribunal in the case of Maruti Suzuki India Ltd. Vs CS Delhi [2024 (4) TMI 724 - CESTAT CHANDIGARH] - It is also found that the Tribunal has also held consistently that extended period cannot be invoked when the demand is based on third party data as recently held by the Tribunal in the case of M/s Antares Services Pvt. Ltd. Vs Commissioner, CGST [2024 (1) TMI 1120 - CESTAT CHANDIGARH]. The impugned order in the present case is totally barred by the limitation and therefore without going into the merits of the case, the entire demand is barred by limitation - Appeal allowed only on limitation. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the demand for Service Tax for the period October 2014 to March 2015, raised by show cause notice dated 28.09.2020, was barred by limitation due to improper invocation of the extended period. (ii) Whether, in the absence of evidence establishing the statutory prerequisites for invoking the extended period (including suppression), the demand and consequential interest and penalties could survive. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Limitation and validity of invoking the extended period Legal framework (as discussed by the Court): The Tribunal examined the demand through the lens of limitation and the permissibility of invoking the extended period where the proceedings are founded on audit-based objections and/or third-party data (including information received from the Income Tax Department). The Tribunal proceeded to decide the appeal solely on limitation. Interpretation and reasoning: The Tribunal noted that the dispute period was October 2014 to March 2015, while the show cause notice was issued on 28.09.2020, and therefore the demand depended upon valid invocation of the extended period. It found, on record, that the demand was triggered by an audit report and by third-party data received from the Income Tax Department. The Tribunal applied its consistent view that when a demand is proposed on the basis of audit, the extended period cannot be invoked, and similarly, where the demand is founded on third-party data (including Income Tax data), the extended period is not invocable. It further found that the Revenue failed to place any evidence establishing the essential ingredients required to invoke the extended period. Conclusion: The Tribunal held that the impugned demand was totally barred by limitation because the extended period was not invocable on the facts and evidentiary record before it. Issue (ii): Survival of demand, interest, and penalties once limitation fails Legal framework (as discussed by the Court): The Tribunal treated the time-bar as dispositive and did not proceed to examine the demand on merits once limitation was decided against the Revenue. Interpretation and reasoning: Having held that the demand itself could not be sustained due to limitation, the Tribunal concluded that it was unnecessary to enter into the merits of taxability, quantum, or alleged incorrect payment particulars. Since the demand was set aside on limitation, the consequential liabilities premised on that demand could not stand. Conclusion: The Tribunal set aside the demand by allowing the appeal only on limitation, without adjudicating the merits; consequently, the impugned order confirming tax demand (and the linked interest and penalties) was not sustained.