{"id":1299,"date":"2026-03-04T05:00:00","date_gmt":"2026-03-03T23:30:00","guid":{"rendered":"https:\/\/bharatlex-rinkutai.com\/?p=1299"},"modified":"2026-01-07T23:10:31","modified_gmt":"2026-01-07T17:40:31","slug":"demand-of-service-tax-is-barred-by-the-limitations-part-3","status":"publish","type":"post","link":"https:\/\/bharatlex-rinkutai.com\/?p=1299","title":{"rendered":"Demand of Service Tax is barred by the Limitations: Part 3"},"content":{"rendered":"\n

Continued from Part 1<\/a><\/p>\n\n\n\n

Part 2<\/a><\/p>\n\n\n\n

6. The authority found that the appellant’s work orders and bill of quantities (BOQ) contain conflicting information about the project locations and the nature of the work, e.g. Bill states Electrification of office building and repair of sodium vapour lamp at Navin Mandi Sthal Shahganj (Jaunpur) while BOQ states extension of L.T Line and Lighting arrangement at NMY, Bindki; Bill states for repair of internal and repair of sodium lamp while BOQ states Internal electrification in ‘C’ Type shop 3 No.’s, service connection work, construction of L.T. Line and lighting arrangement and Internal electrification ‘C’ Type shops. Furthermore, the appellant failed to provide contracts proving the electrification and repair services were for non-commercial use provided to M\/s Krishi Utpadan Mandi Parishad. Since the tax exemption under S. No. 12, 12A, 13 and 14 requires the work to be for a purpose other than business or industry, and the appellant could not prove this, the services remain taxable for the period of 2015 to 2017.<\/p>\n\n\n\n

8. Regarding the payments already made, the appellant argues that the original order only credited them for 8,05,248 rupees in paid taxes. They claim to have actually paid 11,46,459 rupees and are requesting that the difference of 3,40,211 rupees be deducted from their total tax liability. The appellant claims to have paid 11,46,459 rupees in tax, but they failed to provide the actual payment challans to prove it. This higher amount was never mentioned during the original hearing; only the 8,05,248 rupees found in the official records was recognized. Because the appellant provided no documentary evidence to back up the new, higher figure for the 2014-2017 period, the authority rejected the claim as unsustainable.<\/p>\n\n\n\n

9. Under the self-assessment system, the appellant was responsible for correctly calculating and paying their own taxes. The authority found that the appellant hid the true amount of payments received by reporting incorrect figures in their tax returns. This underpayment was only discovered because the department launched an inquiry. The authority concluded this was an intentional act to avoid paying tax. Consequently, the government is legally allowed to use an extended timeframe to demand the unpaid tax, interest, and a penalty for tax evasion.<\/p>\n\n\n\n

10. It was held that contravention of section 66, 66B, 67, 68 of the Act read with Rule 6 of the Service Tax Rules, 1994 is apparent as per details \/documents available and therefore, penalties under Section 77(1)(b) and 77(1)(c) of the Act have been rightly imposed in the impugned order.<\/p>\n\n\n\n

11. The core issue is whether the government can use the extended period of limitation to demand back taxes. The dispute arises from how different parties interpret entries 12, 12A, 13, and 14 of Notification 25\/2012-ST. The appellant believed their services to UPPCL and Mandi Samiti were exempt based on their reading of the law, while the original order disagreed. Because the disagreement stems from a genuine difference in legal interpretation rather than a deliberate attempt to hide facts, the use of the extended time limit to demand tax is not legally justified.<\/p>\n\n\n\n

12. International Merchandise [2022 (67) G.S.T.L. 129 (S.C.)]<\/h3>\n\n\n\n

Hon’ble Supreme Court has in the case of International Merchandise [2022 (67) G.S.T.L. 129 (S.C.)] held as follows:<\/p>\n\n\n\n

24. We are of the considered view that the Tribunal having come to the conclusion that the issue turned upon an interpretation of the provisions of Section 65(68) and Section 65(86b) of the Finance Act, 1994, there was no warrant to allow the invocation of the extended period of limitation and to direct the determination of the penalty following the re-quantification of the demand. The extended period of limitation would clearly not stand attracted in respect of the first show cause notice dated 20 October, 2009. The show cause notice shall hence have to be confined to the normal period of limitation excluding the extended period.<\/em><\/p>\n\n\n\n

25.As far as the penalty is concerned, we are of the considered view that there was no warrant for the imposition of the penalty as the dispute in the present case essentially turned on the interpretation of the statutory provisions and their inter-play with the circular issued by the CBEC. ……”<\/em><\/p>\n\n\n\n

13. Burn Standard Co. Ltd. [2011 (267) E.L.T. 193 (Tri. – Kolkata)]<\/h3>\n\n\n\n

In case of Burn Standard Co. Ltd. [2011 (267) E.L.T. 193 (Tri. – Kolkata)], Kolkata Bench held as follows:<\/p>\n\n\n\n

9.4 ……. We also notice that the dispute involved in these appeals involved fine interpretation of Provisions of Notification 67\/95 read with Rule 6 of the CENVAT Credit Rules, 2001. In the facts and circumstances of the case, we are not inclined to agree with the submission that the appellants have deliberately suppressed any information which they were legally required to submit. In view of the above, we hold that raising of demand invoking extended period of limitation is not justified., The Ld. Advocate submits that the appellants being a public sector undertaking cannot be alleged to have any intention to evade payment of duty. We are not in a position to accept such blanket submissions. However as already mentioned, in the facts and circumstances of this case, we do not find that there was any suppression of relevant facts and therefore extended period of limitation cannot be invoked. For the same reasons we also hold that the appellants are not liable to any penalty.”<\/em><\/p>\n\n\n\n

14. Cochin Minerals & Rutiles Ltd. [2010 (259) E.L.T. 182 (Ker.)]<\/h3>\n\n\n\n

Hon’ble Kerala High Court has in case of Cochin Minerals & Rutiles Ltd. [2010 (259) E.L.T. 182 (Ker.)] observed as follows:<\/p>\n\n\n\n

10. The learned counsel for the appellant therefore very strenuously argued that the Tribunal erred in allowing the appeal of the respondent herein. The learned counsel placed reliance on the following judgments of the Supreme Court. In Continental Foundation Jt. Venture v. Commr. of C.Ex., Chandigarh-I – 2007 (216) E.L.T. 177 (S.C.) at paragraph 10, the Supreme Court considered the meaning of the expression \u201esuppression\u201f occurring under the proviso to Section 11A(1) of the Central Excise Act and held as follows :<\/em><\/p>\n\n\n\n

“10. The expression “suppression” has been used in the proviso to Section 11A of the Act accompanied by very strong words as \u201efraud\u201f or \u201ecollusion\u201f and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct.”<\/em><\/p>\n\n\n\n

Similarly, in Nestle India Ltd. v. Commissioner of Central Excise, Chandigarh [2009 (235) E.L.T. 577 (S.C.)], at paragraph 17, the Supreme Court considered the question as to when the extended period of limitation is invokable and held as follows :<\/em><\/p>\n\n\n\n

“17. On the question as to whether the Department was entitled to invoke the extended period of limitation, we are in agreement with the view expressed by the Tribunal that the extended period of limitation was not invokable in this case for two reasons. Firstly, the assessee has been clearing the said intermixture of vitamins for last more than twenty years prior to the issuance of show cause notice. In fact, during adjudication, the assessee offered demonstration to the Department. The Department did not avail of that opportunity to find out whether there is manufacture in the first instance, conceptually. Secondly, as held in the judgment of this Court in the case of Padmini Products v. Collector of C.Ex., reported in 1989 (43) E.L.T. 195, as well as in the case of Collector of Central Excise v. Chemphar Drugs & Liniments, reported in 1989 (40) E.L.T. 276, extended period of limitation is applicable only when there is some positive act other than mere inaction or failure on the part of the manufacturer. There must be conscious or deliberate withholding of information by the manufacturer to invoke larger period of limitation. In view of the aforesaid two decisions, we see no infirmity in the decision rendered by the Tribunal on the question of extended period of limitation.”<\/em><\/p>\n\n\n\n

Coming to the third judgment, i.e. Union of India v. Rajasthan Spinning & Weaving Mills [2009 (238) E.L.T. 3 (S.C.)], at paragraph 11, the Supreme Court held as follows :<\/em><\/p>\n\n\n\n

“In other words, in the absence of any element of deception or malpractice the recovery of duty can only be for a period not exceeding one year. But in case the non-payment etc. of duty is intentional and by adopting any means as indicated in the proviso then the period of notice and a priory the period for which duty can be demanded gets extended to five years.”<\/em><\/p>\n\n\n\n

11. An examination of the above three judgments makes it abundantly clear that it is not in every case where there is short levy or short payment or non levy, etc. that the extended period of limitation is made available to the department for recovery of the amount of tax which escaped assessment. It is only in those cases where there is wilful and deliberate suppression of the fact, such extended period of limitation is available to the department. An \u201eelement of deception or malpractice\u201f is a necessary concomitant of wilful and deliberate suppression of fact. The Supreme Court also opined that in order to invoke the extended period of limitation under the proviso to Section 11A(1) of the Act, there must be some positive act other than mere inaction or failure on the part of the manufacturer.<\/em><\/p>\n\n\n\n

<\/p>\n\n\n\n

Continue to Part 4<\/a><\/p>\n\n\n\n

Part 5<\/a><\/p>\n\n\n\n

<\/p>\n\n\n

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This is not a legal advice. This article is based on the judgment and order of the Court. <\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Continued from Part 1 Part 2 6. The authority found that the appellant’s work orders and bill of quantities (BOQ) […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[50,76],"tags":[77,78,25],"class_list":["post-1299","post","type-post","status-publish","format-standard","hentry","category-civil-law","category-tax-jurisprudence","tag-finance-act","tag-service-tax","tag-uttar-pradesh"],"jetpack_featured_media_url":"","uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false},"uagb_author_info":{"display_name":"Rinku Tai","author_link":"https:\/\/bharatlex-rinkutai.com\/?author=1"},"uagb_comment_info":0,"uagb_excerpt":"Continued from Part 1 Part 2 6. The authority found that the appellant’s work orders and bill of quantities (BOQ) […]","_links":{"self":[{"href":"https:\/\/bharatlex-rinkutai.com\/index.php?rest_route=\/wp\/v2\/posts\/1299","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bharatlex-rinkutai.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bharatlex-rinkutai.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bharatlex-rinkutai.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bharatlex-rinkutai.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1299"}],"version-history":[{"count":1,"href":"https:\/\/bharatlex-rinkutai.com\/index.php?rest_route=\/wp\/v2\/posts\/1299\/revisions"}],"predecessor-version":[{"id":1307,"href":"https:\/\/bharatlex-rinkutai.com\/index.php?rest_route=\/wp\/v2\/posts\/1299\/revisions\/1307"}],"wp:attachment":[{"href":"https:\/\/bharatlex-rinkutai.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1299"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bharatlex-rinkutai.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1299"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bharatlex-rinkutai.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1299"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}