By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Extended period of limitation cannot be invoked in a case where the department had issued a SCN on the same grounds for previous period.
Facts:
The appellants engaged in providing vehicles on hire were not paying service tax and were not filing service tax returns. Therefore, the department issued a Show Cause Notice (SCN) considering the said services to be “rent-a-cab services” for the period from February, 2004 to March 2005 demanding service tax with interest and penalty u/s. 76, 77 and 78 of the Finance Act, 1994. Relying on the Hon’ble Apex Court’s decision in case of Nizam Sugar Factory vs. CCE, A.P. 2008 (9) STR 314 (SC), the appellants argued that the SCN was time barred since on the same grounds, the department had issued SCN previously for the period from 01/04/2002 to 31/12/2003.
Therefore, the department was aware of the facts and accordingly, there cannot be any allegation with respect to suppression of facts from the department and thereby, invoking extended period of limitation was not justified. Further, relying on Tribunal’s decision in the case of P. Sugumar vs. CCE, Pondicherry 2010 (17) STR 524 (Tri.-Chennai), the activity of the appellants, being transportation of employees at a pre-determined rate, were not covered under “rent-a-cab services”. The department argued that the said activity was taxable in view of Punjab & Harayana High Court’s decision in the case of CCE, Chandigarh vs. Kuldeep Singh Gill 2010 (18) STR 708 (P & H). Further, since the appellants did not submit ST-3 returns, it amounted to suppression of facts and therefore, invoking of extended period was justified.
Held:
Though the appellants wilfully ignored the payment of service tax and submission of returns even after issuance of SCN for the previous period, the activities of the appellants were fully known to the department. The department could have further searched the premises of the appellants in such a case to obtain any requisite information. Accordingly, following the ratio laid down by the Hon’ble Apex Court in case of Nizam Sugar Factory vs. CCE, A. P. (Supra), the demand was not sustainable on the grounds of limitation and therefore, the issue was not discussed with respect to its merits.
