Intermediary service tax classification and extended limitation period challenge upheld where merits decided for normal period, extended period found immaterial

Whether characterization as an intermediary for foreign service providers attracted service tax for the normal period and whether invocation of the extended period of limitation remained relevant; the tribunal treated the merits determination for the normal limitation period as dispositive, reasoning that once the normal-period liability was settled in favour of the assessee the question of invoking extended limitation became immaterial, and the adjudicating authority's finding to drop demands for the extended period was affirmed by dismissing the Revenue appeal.

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Issues: (i) Whether the Revenue can invoke the extended period of limitation to demand service tax where the issue on merits for the normal period has already been finally decided in favour of the assessee.

Analysis: The Tribunal had earlier decided on merits for the normal period that the assessee was not acting as an intermediary; that order attained finality. The present appeal by the Revenue is limited to the question of invoking the extended period of limitation. Given the final adjudication on the substantive question for the normal period, the relevance of the extended period demand depends on whether the Revenue can sustain a separate extended-period demand despite the earlier final decision. The Tribunal referred to precedents addressing invocation of extended limitation where merits stand finally decided and noted that the settled position in those authorities supports the view that a conclusively decided merit on the normal period renders the extended-period demand unsustainable.

Conclusion: The Revenue's appeal limited to invocation of the extended period is dismissed and the findings of the Adjudicating Authority dropping the demand for the extended period are upheld in favour of the assessee.

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