Limitation bars later service tax demand where excess tax adjustment was disclosed and the underlying service was non-taxable.

Where an assessee had already informed the Department about a revised return and adjustment of excess service tax paid, the later demand was treated as unsustainable because the adjustment related to a service found to be non-taxable and the Department had prior notice of the relevant correspondence. The resulting show-cause notice was treated as time-barred, and no infirmity was found in the order dropping the demand. The adjustment was left undisturbed, the Revenue's challenge failed, and the impugned order was affirmed.

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Issues: Whether the assessee's adjustment of excess service tax paid was barred by Rule 6(4B) of the Service Tax Rules, 1994 and whether the show-cause notice was sustainable in light of the prior intimation to the Department.

Analysis: The assessee had intimated the Department about the revised return and the adjustment of excess service tax already paid. On the facts recorded, the adjustment was made in respect of a service found to be non-taxable, and the Department was already aware of the relevant letter dated 23.06.2011. In that background, the notice issued later was treated as time-barred, and no infirmity was found in the order dropping the demand.

Conclusion: The adjustment was not disturbed and the Revenue's challenge failed.

Final Conclusion: The impugned order was affirmed and the Revenue's appeal was rejected.

Ratio Decidendi: Where the assessee has already brought the adjustment of excess tax payment to the notice of the Department and the underlying service is found non-taxable, a later demand notice may be held unsustainable on limitation grounds.

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