Limitation challenge to service tax demand failed where the assessee had not disputed the demand on merits and relied on an amnesty scheme.

A limitation challenge to a service tax demand was found unsustainable where the assessee had not disputed the demand on merits before the Tribunal and had confined the appeal to the penalty under Section 78 of the Finance Act, 1994. The Tribunal record also reflected reliance on an amnesty scheme, supporting the inference that the demand itself was not being contested, including on limitation. On that basis, the High Court found no ground to entertain the limitation objection in the appeal.

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Issues: Whether the challenge to the service tax demand on the ground of limitation was sustainable when the appellant had not disputed the demand on merits before the Tribunal and had also availed the amnesty scheme.

Analysis: The appeal before the Tribunal was confined to the penalty imposed under Section 78 of the Finance Act, 1994, and the appellant had not contested the demand on merits. The contents of the Tribunal order showed an admission of the demand and reliance on the amnesty scheme, which supported the conclusion that the demand was not being disputed even on limitation. In these circumstances, the High Court found no basis to entertain the limitation challenge in the present appeal.

Conclusion: The limitation-based challenge was held to be unsustainable, and the appeal was rejected.

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