Limitation and Evidence: extended limitation cannot be invoked absent proof of suppression; demands and penalties set aside.

Extended period of limitation cannot be invoked where revenue relies solely on discrepancies between returns and balance sheet entries without independent evidence of suppression or wilful misstatement; accordingly demands based on such invocation are time-barred. Classification of the appellant as a commission agent rendering business auxiliary services was unsupported by evidence of a principal agent or service recipient relationship and exceeded the scope of the show cause notices, so that taxability finding fails. Consequential denial of cenvat credit and imposition of interest and penalties collapse with the primary demands. The appellate orders are set aside and the appeals allowed with consequential reliefs.

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Issues: (i) Whether the demands confirmed by the adjudicating authority and sustained on appeal invoking the extended period of limitation are sustainable; (ii) Whether the appellant's activities are taxable as business auxiliary services as a commission agent; (iii) Whether cenvat credit denial and consequent interest and penalties are sustainable.

Issue (i): Whether the extended period of limitation was correctly invoked to sustain the demands.

Analysis: The extended period was invoked without evidence of suppression or wilful misstatement with intent to evade tax. The demands were based primarily on a difference between amounts declared in periodical returns and the balance sheet without independent evidence (such as agreements or documents) proving that the excess reflected consideration for taxable services. Earlier show cause notices on similar matters were issued by the department and no positive act of suppression was established to justify invocation of the extended period afresh.

Conclusion: The extended period of limitation was wrongly invoked and the demands are barred by limitation.

Issue (ii): Whether the appellant acted as a commission agent rendering business auxiliary services attracting service tax.

Analysis: The finding that the appellant acted as a commission agent was not supported by evidence showing that the appellant acted on behalf of the alleged principals. The appellate orders traversed beyond the scope of the show cause notices and the adjudicating findings, and the show cause notices did not put the appellant on notice of applicable provisions for the post-01-07-2012 period. The record lacked documents establishing a principal-agent/service recipient relationship or other material proving that the appellant procured orders on behalf of clients.

Conclusion: The classification of the appellant as a commission agent providing business auxiliary services is unsustainable for lack of evidence and for traversion beyond the show cause notice.

Issue (iii): Whether denial of cenvat credit and imposition of interest and penalties stand where the primary demands are unsustainable.

Analysis: The denial of cenvat credit was premised on the same unsupported allegations of taxable BAS and commission agency. With the primary demands and extended period invocation held unsustainable, the consequential denial of credit, interest and penalties lacks foundation. Distinguishing case law relied upon by revenue shows those decisions involved proven fraud or positive suppression, facts not present here.

Conclusion: The denial of cenvat credit and the imposition of consequential interest and penalties are untenable.

Final Conclusion: The impugned appellate orders are unsustainable and are set aside; the appeals are allowed with consequential legal reliefs.

Ratio Decidendi: Where revenue relies solely on discrepancies between return figures and balance sheet entries, the burden to prove taxable service receipt and any wilful suppression rests on the revenue, and absent independent evidence of suppression or of a principal-agent relationship the extended period of limitation and resultant demands cannot be sustained.

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