Extended limitation for service tax demand fails without independent proof of taxable receipts and wilful suppression.

An extended-period service tax demand cannot be sustained merely on third-party TDS or ITR data; the Revenue must independently verify that the receipts represent taxable service consideration and establish fraud, collusion, wilful misstatement, suppression of facts, or intent to evade tax. Income-tax records alone do not prove service tax liability, and where receipts were disclosed in accounts and returns, the statutory preconditions for extended limitation were not met. On that basis, the demand was held unsustainable and the assessee obtained consequential relief.

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Issues: Whether a demand under Section 73 of the Finance Act, 1994 could be sustained by invoking the extended period of limitation solely on the basis of third-party TDS/ITR data, without independent inquiry or material establishing non-payment of service tax, fraud, or wilful suppression.

Analysis: Invocation of the extended period is an exceptional measure and requires the Revenue to establish fraud, collusion, wilful mis-statement, suppression of facts, or intent to evade tax through cogent material. Third-party TDS/Form 26AS data may provide a starting point for inquiry, but it is not conclusive proof that the amounts represent taxable service consideration. Where the department does not conduct independent verification from the deductors or otherwise examine the nature of the receipts, the demand rests on assumption rather than proof. The separate operation of income tax and service tax regimes also means that income reflected in income-tax records does not, by itself, establish service tax liability. In the absence of evidence of deliberate concealment, and where the receipts were otherwise disclosed in accounts and returns, the preconditions for the extended period were not satisfied.

Conclusion: The extended period of limitation was not validly invoked, and the demand sustained on that basis could not stand.

Final Conclusion: The impugned demand was unsustainable for want of the statutory ingredients necessary to justify extended limitation, and the appeal succeeded with consequential relief.

Ratio Decidendi: A service tax demand under the extended period cannot be based merely on third-party income-tax data unless the Revenue independently establishes taxable liability and the statutory elements of fraud or wilful suppression.

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