Extended period of limitation cannot be invoked in second audit when during first audit the issue in question was never raised

Trans Engineers India Pvt. Ltd. v/s CCE, Pune 2015 (40) STR 490 (Tri-Mum.)

Extended period of limitation cannot be invoked in second audit when during first audit the issue in question was never raised.

FACTS:

The assessee took registration in February, 2005 and charged service tax on invoices raised

from November, 2004 to February, 2005 only for those clients who agreed to pay service tax. Therefore, charge of suppression was alleged by the department. Show cause notice (SCN) was issued in 2009 invoking extended period of limitation. It was contended that the records were already audited in 2006 by audit section and no objections were raised regarding discharge of entire service tax liability and filing of returns. Therefore, it was argued that extended period of limitation cannot be invoked during second audit.

HELD:

Appellant had himself discharged short payment on noticing the same and also shown the payment in returns. In the first audit, question of short payment was never raised. Therefore, during second audit, it would not be justified to invoke extended period of limitation since records were audited already once and such short payment was not detected. Accordingly, relying on High Court’s judicial pronouncements, the order was set aside on the grounds of limitation.