Service Tax Demand Partially Upheld: Limitation Period Examined, COVID-19 Extensions Considered, Penalty Reduced Under Section 78

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....CESTAT partially allowed the appeal concerning service tax demand for 2014-15. The tribunal held that for the period March 2014 to September 2014, the demand was barred by limitation as the show cause notice exceeded the 5-year period. For October 2014 to March 2015, the show cause notice was deemed valid, considering COVID-19 related limitation extensions. The tribunal remanded the matter to the Original Authority for re-determining tax liability, considering that only 50% service tax was payable by the appellant. Penalty under Section 78 was set aside due to advocate's ignorance, and late fees were reduced to Rs. 10,000. The service tax demand based on Income Tax data was found sustainable and valid.....