‘Extended Limitation Period Invalid without Deliberate Suppression by Manufacturer’: CESTAT sets aside Service Tax Demand [Read Order]
CESTAT noted that the limitation period was wrongly invoked in the above case, due to which the impugned SCN is barred by time, and thus, the demand is also hit by limitation
![‘Extended Limitation Period Invalid without Deliberate Suppression by Manufacturer’: CESTAT sets aside Service Tax Demand [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/05/Extended-Limitation-Period-Invalid-without-Deliberate-Suppression-Deliberate-Suppression-taxscan.jpg "‘Extended Limitation Period Invalid without Deliberate Suppression by Manufacturer’: CESTAT sets aside Service Tax Demand [Read Order]")
The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) set aside the service tax demand by noting that the conscious and deliberate withholding of the information by the manufacturer is necessary for extending the limitation period. Coming to the facts of the present case, the appellant, M/s Jainco Enterprises, has a service tax registration for...
The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) set aside the service tax demand by noting that the conscious and deliberate withholding of the information by the manufacturer is necessary for extending the limitation period.
Coming to the facts of the present case, the appellant, M/s Jainco Enterprises, has a service tax registration for providing Commercial or Industrial Construction Service, Works Contract Service, and Construction of Residential Complex Service. During the audit, it was observed that the appellant had provided Works Contract Service to M/s Kota Thermal Power Station, Kota (KTPS).
For the years 2010–11 and 2011–12, the appellant received Rs. 40.81 lakhs and Rs. 96.29 lakhs, respectively, for work contract services but did not pay service tax on these amounts. After the issue was pointed out, the appellant paid Rs. 4,36,950 in service tax and Rs. 1,86,868 in interest on 28.02.2014.
The department later found that this was still short of the full tax due. They calculated an outstanding amount of Rs. 9,75,185 and issued a show cause notice on 29.01.2016, proposing to recover the remaining tax and interest and impose a penalty.
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The assessee’s counsel submitted that the extended period of limitation was not applicable in the assessee’s case, as the latter did not have any malafide intention and that the revenue had no record to prove otherwise.
The bench relied on the decision of the Collector of Central Excise, Hyderabad Vs. Chemphar Drugs& Liniments, Hyderabad, reported as 1989 (40) ELT 276 (SC), in which the court had concluded that the extended period of limitation is applicable only when something positive other than mere inaction or failure on the part of the manufacturer is proved.
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The bench further noted, "If the department had full knowledge or the manufacturer had reasonable belief that he was not requested to give particular information, only the normal period of limitation, only 1 year, is applicable.”
The CESTAT Delhi reached a strong conclusion that the limitation period was wrongly invoked in the above case, due to which the impugned SCN is barred by time, and thus, the demand is also hit by limitation.
The tribunal comprising Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) allowed the appeal and set aside the demand.
To Read the full text of the Order CLICK HERE
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