Case Law Details
Heena Enterprises Vs Commissioner of Central Excise & ST (CESTAT Ahmedabad)
In the case of Heena Enterprises Vs Commissioner of Central Excise & ST, the issue of invoking the extended period for service tax liability comes into play. The appellant contends that the demand for service tax beyond the limitation period of one year is time-barred, as specified in Section 73(1) of the Finance Act, 1994
The Show Cause Notices dated 21-4-2010 demand service tax for the period October 2004 to March 2009. However, it is crucial to establish whether there is evidence of suppression of facts or intentional contravention to evade payment of service tax. If such evidence is lacking, the larger limitation period of five years, as specified in the proviso to Section 73(1), cannot be applied.
The appellant argues that the non-payment of service tax was based on a reasonable and bona fide belief that no service tax was payable for the activities undertaken. This belief is supported by various decisions of the Tribunal, which also concluded that no service tax was applicable to similar activities. As per settled law, when a demand is based on the records maintained by the assessee, and the non-payment of service tax is due to a bona fide belief, the extended limitation period cannot be invoked. This principle has been upheld in several judgments, including Steelcast Ltd v CCE, Religare Securities Ltd v CST, Lanxess Abs Ltd v CCE, and K. K. Appachan v CCE.
Conclusion: The case of Heena Enterprises Vs Commissioner of Central Excise & ST highlights the importance of bonafide belief in determining the applicability of the extended period for service tax liability. If an appellant can establish that they genuinely believed no service tax was payable based on reasonable grounds and supported by precedent, the larger limitation period of five years may not be applicable. It is essential to consider the evidence of suppression or intent to evade payment of service tax when deciding the limitation period in such cases.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
