Extended Limitation cannot be invoked where department already knew facts; SCN based solely on third party data unsustainable.

Extended limitation cannot be invoked where identical facts were already known to the Department and an earlier SCN on the same facts existed; therefore the later SCN for the relevant year was held unsustainable. Demands founded solely on third party income tax data without examination of the assessee's books and records are not maintainable; mechanical reliance on Form 26AS entries was rejected. Transactions evidenced as pure trading in goods, with tax discharged under VAT, fall within the negative list exemption and do not attract service tax. Appeal allowed; impugned order set aside on limitation and merits.

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Issues: (i) Whether the subsequent show cause notice invoking the extended period of limitation for F.Y. 2016-17 is sustainable when an earlier SCN on similar facts for an earlier period had been issued; (ii) Whether the demand for service tax of Rs.86,23,306/- based solely on Income Tax third-party data is sustainable and whether the appellant's trading activity falls under the negative list (clause (e) of Section 66D of the Finance Act, 1994) and is therefore not taxable.

Issue (i): Whether the extended period of limitation could be invoked for the later SCN dated 22/23.10.2021 for F.Y. 2016-17 when an earlier SCN on similar facts for F.Y. 2015-16 had already been issued and adjudicated.

Analysis: The Tribunal examined the sequence of SCNs and the authorities' knowledge of the same facts at the time of the earlier SCN. Reliance was placed on settled principles that extended limitation is invokable only upon conscious suppression, fraud or collusion and not where relevant facts were already within the knowledge of the Department. The Tribunal noted that the earlier SCN for F.Y. 2015-16 had been issued on similar facts and was decided in favour of the appellant by the Commissioner (Appeals). The second SCN was issued mechanically on the basis of third-party Income Tax data without evidence of suppression by the assessee and despite the assessee filing ST-3 returns.

Conclusion: The extended period of limitation is not invokable in favour of the Revenue; the subsequent SCN invoking the extended period is unsustainable. Conclusion in favour of the assessee.

Issue (ii): Whether the demand based solely on Income Tax third-party information is sustainable and whether the appellant's activity of trading in goods is taxable.

Analysis: The Tribunal considered authorities holding that demands based solely on third-party Income Tax data without examination of the assessee's books are not sustainable. The appellant produced sale invoices, VAT payment evidence and documentary material showing trading in goods and association with an importer. The Tribunal found the transactions to be trading of goods on which VAT had been discharged and that the demand relied mechanically on Form 26AS entries without independent verification of records. The Tribunal also noted that trading activity falls under clause (e) of Section 66D of the Finance Act, 1994 (Negative List), and no specific taxable service was identified in the SCN or impugned orders.

Conclusion: The demand based solely on third-party Income Tax information is unsustainable and the appellant's trading activity is not subject to service tax under the negative list; conclusion in favour of the assessee.

Final Conclusion: The impugned order is set aside both on limitation grounds and on merits; the appeal is allowed with consequential relief as per law.

Ratio Decidendi: Where relevant facts were already known to the Department and an earlier SCN on the same facts exists, extended limitation cannot be invoked later; further, demands founded solely on third-party income tax data without examination of the assessee's books of account and records are not sustainable, and pure trading of goods covered by the negative list under clause (e) of Section 66D of the Finance Act, 1994 is not taxable for service tax purposes.

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