By TIOL News Service

MUMBAI , APR 08, 2014: THIS is a Revenue appeal.

The respondents are a Banking company and paying service tax under Banking & Financial Service. Theywere filing service tax returns regularly showing payment of service tax as per actual receipt. In November, 2007, an audit took place and it was found that there is a discrepancy in the figures in the balance sheet and service returns as the figures shown in the balance sheet towards service provided are on higher side as compared to service tax returns.

A Show-cause notice came to be issued on 18.06.2009 by invoking extended period of limitation for the period April 2004 to March 2008.

The order of the adjudicating authority was set aside by the Commissioner(Appeals) on the ground that extended period of limitation is not invokable.

And, therefore, as mentioned, Revenue is before the CESTAT. It is submitted that the decision in Chemphar Drugs & Liniments (2002-TIOL-266-SC-CX) relied upon by the Commissioner(A) is not applicable as the facts of the said case are different from the one on hand; that the case be remanded for decision on merits.

On the other hand, the respondent assessee submitted that in the instant case some demands are within the period of limitation and the extended period of limitation is not invokable as there is no suppression on the part of the respondent. Therefore, matter can be remanded for decisionon merits with regard to the demands pertaining to the normal period of limitation.

The Bench observed -

"6. …In this case, the allegation against the respondent is that they have suppressed the material fact which was came to the knowledge of the department during the audit. After going through the facts of the case, I find that during the impugned period, service tax is required to be paid at the time of receipt of the remuneration towards the service provided. In service tax returns, there is no column for receipt, what the services has been provided and how much has been received for the service provided. Every service tax returns has to show amount of recovery towards the service provided not on accrual basis. But the respondents are maintaining their books of accounts on accrual basis as per Income Tax and Banking Regulation. So these two documents cannot be clubbed together to ascertain the fact in the absence of service tax returns and there is no duty cast on the assessee in the Finance Act that he is to provide the details of service provided and service receipt during the impugned period. In these circumstances, I hold that there was no suppression of fact on the part of the respondent. Accordingly, I hold that extended period of limitation is not invokable. I find that some part of the demand pertain to normal period of limitation. Therefore, to ascertain the liability of such period, matter needs examination at the end of the ld. Commissioner(Appeals) and therefore matter is remanded back to the Commissioner(Appeals) to examine the issue on merits for the demands pertaining to the normal period of limitation."

In fine, the appeal was allowed by way of remand.

(See 2014-TIOL-526-CESTAT-MUM)