Extended limitation requires deliberate evasion, so repeated audit-based service-tax demands on identical issues fail as time-barred.

Extended limitation for service-tax recovery cannot rest merely on audit-based scrutiny or discrepancies between financial statements and self-assessed returns. Where an earlier notice had addressed identical alleged short payment, a subsequent notice could not again invoke the extended period without establishing fraud, collusion, wilful misstatement, suppression of facts, or intent to evade tax; the demand was therefore time-barred. On merits, goods supplied under separate invoices were not consideration for business auxiliary service, residential letting was not taxable, and turnover reconciliation established no additional liability for supply of tangible goods. The confirmed tax, interest and penalties could not survive.

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Issues: (i) Whether the extended period of limitation could be invoked for recovery of alleged short-paid service tax on the basis of an audit report when an earlier notice on the identical issue had been issued for a previous period; (ii) Whether the service-tax demands relating to business auxiliary service, renting of immovable property and supply of tangible goods were sustainable on merits.

Issue (i): Whether the extended period of limitation could be invoked for recovery of alleged short-paid service tax on the basis of an audit report when an earlier notice on the identical issue had been issued for a previous period.

Analysis: Service-tax returns are furnished under the self-assessment regime, and scrutiny, call for records and best-judgment assessment mechanisms permit the departmental officer to raise a demand within the normal limitation period. A mere discrepancy between financial statements and returns does not itself establish fraud, collusion, wilful misstatement, suppression of facts or intent to evade tax. Since an earlier notice for short payment on the identical issue had already invoked the extended period, a subsequent notice founded on an audit report could not again invoke that period.

Conclusion: The extended period was not invocable and the demand was barred by limitation, in favour of the assessee.

Issue (ii): Whether the service-tax demands relating to business auxiliary service, renting of immovable property and supply of tangible goods were sustainable on merits.

Analysis: The amount treated as consideration for business auxiliary service related to supply of goods supported by separate invoices and was not taxable as that service. The portion of immovable property let out for residential use was not liable to service tax. The reconciliation of turnover, taxable value and tax payments also showed that no further liability arose under supply of tangible goods service.

Conclusion: None of the three demands was sustainable on merits, in favour of the assessee.

Final Conclusion: The confirmed service-tax liability, interest and penalties could not survive either on limitation or on merits.

Ratio Decidendi: The extended limitation period cannot be founded merely on belated audit-based scrutiny of returns, particularly where the department had earlier issued a notice on the identical issue, unless the statutory ingredients of deliberate evasion are established.

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