Extended limitation fails where filed returns negate suppression, while reverse-charge tax payment prevents duplicate recovery from service providers.

Extended limitation for service-tax demands based on third-party income-tax data is inapplicable where filed ST-3 returns and departmental records disclose the relevant receipts and do not support suppression. The notes state that demands founded on an unverified assumption of non-filing cannot validly cover all Form 26AS receipts. For manpower-supply services, tax paid by recipients under the applicable reverse-charge mechanism cannot be recovered again from the service provider. Timely return filing also defeats late-fee allegations, while interest and penalties require a sustainable principal demand. The stated principle is that verified statutory records and prior discharge of reverse-charge liability preclude duplicate recovery.

---

---

Issues: (i) Whether the service-tax demand based on third-party income-tax data could be sustained by invoking the extended period of limitation despite filed ST-3 returns; (ii) Whether service tax was recoverable from the service provider on manpower-supply services where the recipient had discharged tax under reverse charge mechanism; (iii) Whether late fee, interest and penalties consequential to the demand were sustainable.

Issue (i): Whether the service-tax demand based on third-party income-tax data could be sustained by invoking the extended period of limitation despite filed ST-3 returns.

Analysis: The departmental relied-upon data itself recorded the value disclosed in the ST-3 return, whereas the notice proceeded on the erroneous premise that no returns had been filed and demanded tax on the entire receipts reflected in Form 26AS. The records established timely filing of both ST-3 returns and disclosure of work-contract receipts. The demand was therefore raised without verification of departmental records and without a sustainable basis for alleging suppression or invoking the extended period.

Conclusion: The extended period could not be invoked and the demand was unsustainable on limitation, in favour of the assessee.

Issue (ii): Whether service tax was recoverable from the service provider on manpower-supply services where the recipient had discharged tax under reverse charge mechanism.

Analysis: The contracts established provision of manpower-supply services, and the service recipients' challans established payment of the applicable service tax under the reverse-charge mechanism prescribed by the notification. As the tax liability for those services stood discharged by the recipients, no further tax could be demanded from the service provider.

Conclusion: No service-tax demand was recoverable from the assessee in respect of the manpower-supply services, in favour of the assessee.

Issue (iii): Whether late fee, interest and penalties consequential to the demand were sustainable.

Analysis: The returns had been filed within time; consequently, the premise for levy of late fee was factually incorrect. Since the principal demand failed both on limitation and merits, the consequential interest and penalties lacked an independent basis.

Conclusion: The late fee, interest and penalties were unsustainable and were set aside, in favour of the assessee.

Final Conclusion: The service-tax proceedings founded on unverified third-party data were nullified, with no surviving fiscal liability on the assessee.

Ratio Decidendi: A service-tax demand cannot be sustained by invoking the extended limitation period where filed statutory returns and departmental records negate suppression, and tax discharged by the recipient under the applicable reverse-charge mechanism cannot be recovered again from the service provider.

---