Extended limitation period requires positive evidence of fraud or suppression; without it tax demand is time barred.

Invocation of the proviso to Section 73(1) for extending the limitation period requires positive, deliberate evidence of fraud, collusion, wilful misstatement or suppression of facts with intent to evade tax; mere receipt of third party information or absence of documentary explanation is insufficient. The initial burden rests on the department to produce material establishing deliberate suppression, after which the burden may shift. Applying these principles, the extended period could not be validly invoked in the absence of such positive evidence, and the demand for service tax, interest and penalties under the extended period was held time barred and set aside.

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Issues: (i) Whether the demand for service tax, interest and penalties raised by invoking the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994 (read with other provisions), is sustainable or is time-barred.

Analysis: Issue (i): Legal framework includes the ordinary limitation for service tax demands and the proviso to Section 73(1) of the Finance Act, 1994 which permits invocation of an extended limitation period only where non-payment or short-payment arises from fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade tax; Section 75, Section 77(1)(c) and Section 78 of the Finance Act, 1994 provide for interest and penalties; Section 11A of the Central Excise Act, 1944 is pari materia and judicial authorities require a positive, deliberate act to attract the proviso; Section 6 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 concerns temporal extension. Applying these principles to the facts: the department relied on information from the Income Tax Department and the absence of documentary explanation by the assessee; however, invoking the proviso requires positive evidence of deliberate suppression or intent to evade, not merely nonpayment or receipt of third-party data; authorities cited establish that mere failure to disclose or negligence does not automatically attract the extended period and that the initial burden is on the department to produce material showing suppression, with the burden shifting only after such material is produced.

Conclusion: Issue (i): The invocation of the extended period of limitation is not sustainable because the requisite positive evidence of fraud, collusion, wilful misstatement or suppression of facts with intent to evade payment is absent; accordingly, the demand for service tax, interest and penalties raised under the extended period is time-barred and is set aside.

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