Extended limitation for service tax demands requires recorded statutory grounds; Form 26AS alone could not sustain demand, interest, or penalties.

Service tax demand based solely on Form 26AS was held unsustainable where the adjudication did not independently examine the services rendered or record the statutory grounds needed to invoke the extended limitation period under Section 73 of the Finance Act, 1994. The record contained no finding of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade tax, making the enlargement of limitation jurisdictionally improper. As the demand could not stand, the consequential interest and penalties also failed. The impugned order was therefore set aside in favour of the assessee, following an earlier coordinate Bench decision on identical facts.

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Issues: Whether a service tax demand and consequential interest and penalties could be sustained when the adjudication was founded solely on Form 26AS and the preconditions for invoking the extended period of limitation under Section 73 of the Finance Act, 1994 were not recorded.

Analysis: The demand was raised for the relevant financial year on the basis of information reflected in Form 26AS, without independent examination of the nature of the services rendered or a finding that the statutory conditions for invoking the extended period existed. The record disclosed no conclusive finding of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade tax, which are mandatory for enlargement of limitation under Section 73. The impugned adjudication therefore amounted to an unauthorized assumption of jurisdiction. Once the demand itself was unsustainable, the consequential levy of interest and penalties also could not survive. The earlier coordinate Bench decision on identical facts was followed.

Conclusion: The service tax demand, interest, and penalties were held unsustainable and the impugned order was set aside in favour of the assessee.

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