2.
Sir,
According to Section 73 (1) of Finance Act, 1994, if any service tax is not levied or not paid or short levied or short paid or erroneously refunded Central Excise Officers shall issue show cause notice demanding the amount of tax not levied or not paid or short levied or short paid or erroneously refunded within eighteen months from the relevant date.
According to Section 73 (6) of the Finance Act, 1994 the relevant date means-
(i) in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short-paid-
(a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed;
(b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules;
(c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder;
(ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made thereunder, the date of adjustment of the service tax after the final assessment thereof;
(iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund.
Once the show cause notice is issued the Department cannot invoke five year period subsequently, that is, if Department had issued showcause notice for the year 2009-10 in 2012 the period 18 months or five years is to calculated backwards from the date on which the investigation was concluded. Actually there is no time limit prescribed for issuing show cause notice. However High courts have found inordinate delay in issuing show cause notice as erroneous and not sustainable..