2026-VIL-212-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Invocation of extended period of limitation - Based on information received from the Income Tax Department that there was a difference in the value of services shown in the appellant's income tax returns and service tax returns - The extended period of limitation invoked alleging that the appellant had suppressed the material facts with the intent to evade payment of service tax - Whether the extended period of limitation could have been invoked against the appellant to make the service tax demand - HELD - In cases where the service tax is payable by the service recipient under the reverse charge mechanism, the service provider cannot be held liable for non-payment of tax by the service recipient - The extended period of limitation can be invoked only when there is a positive act of fraud, collusion, wilful misstatement or suppression of facts with the intent to evade payment of tax. Mere non-payment of tax, without any element of intent or suppression, is not sufficient to attract the extended limitation period - For the department to invoke the extended period of limitation, there must be an active and deliberate act on the part of the assessee to evade payment of tax. In the present case, the appellant had a bonafide belief that the service tax was payable by the service recipient under the reverse charge mechanism and there was no positive act of suppression or evasion on the part of the appellant - The demand made by invoking the extended period of limitation is set aside and the appeal is allowed
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