Commissioner of Service Tax vs Gujarat State Seeds Certification Agency

Akil Kureshi, J.—Department is in appeal against the decision of the Customs, Excise and Service Tax Appellate Tribunal ("the CESTAT", for short) dated June 5, 20122. Following questions have been framed for our consideration:

(A) In the facts and circumstances of the case whether the CESTAT, WZB, Ahmedabad, is justified in setting aside the demand of service tax only on the ground of limitation without examining the merits of the case?

(B) Whether the CESTAT, WZB, Ahmedabad, is justified in holding that Department had taken a stand that the appellant''s services would not fall under the category of services of technical inspection and certification services, whereas, nowhere such stand was ever taken by the Department?

Short question pertains to the issue whether the Department could have invoked larger period of limitation in facts of the case. The Tribunal in the impugned judgment ruled in favour of the assessee and held that invocation of larger period by the authorities was not in consonance with law. To come to such conclusion, the Tribunal relied on a letter dated August 1, 2006 written by the office of the Commissioner of Service Tax that the assessee''s activities would not fall under the category of taxable service. This letter of course was withdrawn later on October 27, 2006. The period under dispute is between October 2004 to March 2006 for which a show-cause notice was issued on April 13, 2010. Thus, the period relates to time before the letter of the office of the Commissioner was withdrawn on October 27, 2006. On such basis, the Tribunal was of the opinion that when the Department itself was in doubt regarding the taxability of service in question, larger period could have been invoked. It was held that without invoking such extended period, notice was blatantly time-barred. We are in broad agreement with the view of the Tribunal. The Department itself had at one stage conveyed to the assessee that service in question was not taxable service. Though subsequently such letter was withdrawn, the assessee cannot be stated to have, with mala fide intention or with the purpose of breaching the provisions of the Act or the Rules, made inaccurate or incorrect declaration.

Tax appeal is therefore, dismissed.