No Invocation of Extended Time Period for Issuance of Second Show Cause Notice Demanding Service Tax: CESTAT [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that there can be no invocation of the extended time period for issuance of second show cause notice demanding service tax.

The department formed a view that the appellant, Messrs Aarvee Denims & Exports Ltd has been receiving service of foreign agents for which they have not discharged the service tax liability as per the provision of the Finance Act, 1994. The department that as per the provisions of section 66 A of the Finance Act, 1994 read with Section 65 (19) of the Finance Act, 1994 and Section 65 (105) (zzb) of the said act with regard to the Business Auxiliary Service, the appellant should have paid service tax on the services received by him from the persons based outside India.

With regard to the second show cause notice where under the service tax has been confirmed for the period April 2007 to March 2008 which for which show cause notice was issued on 20.03.2009, the advocate for the appellant submitted that second show cause notice is also barred by the period of limitation as same has been issued by invoking the extended period of demand.

The Counsel further submitted that the show cause notice should have been issued during the normal period of demand as show cause notice dated 17.03.2008 has already been issued under the provision of Section 73 (1) of the Finance Act, 1994 alleging suppression of facts with intention to evade payment of service tax and invoking larger period of demand.

A Single-Member Bench comprising CL Mahar, Technical Member observed that the first show cause notice has already been issued on 17.03.2008 invoking a period of five years and therefore, the second show cause notice should have been for normal period of demand and department should not have invoked the extended time period for demanding service tax.

The Bench further noted that the second show cause notice dated 20.03.2009 is beyond normal period of limitation and therefore, the matter is remanded back to the original adjudicating authority to re-adjudicate the matter in view of the above observation and confirm the service tax for the normal period of demand as provided under Section 73 (1) of the Finance Act, 1994.

To Read the full text of the Order CLICK HERE

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