Chennai CESTAT Sets Aside ₹89 Lakh Residential-Construction Service-Tax Demand Against Chaitanya Shantiniketan, Finding No Evidence Of Suppression Beyond Earlier Notice

In brief

The question

1. Whether the Revenue was justified in invoking the extended period of limitation for the demands

The court held

The Tribunal held that the Revenue had not justified invoking the extended period of limitation and set aside the impugned order.

It also directed

All three appeals were allowed, with consequential benefits, if any, as per law.

01Facts

The Revenue issued show-cause notices/demands for April 2011 to March 2014, alleging that the appellant’s construction activity was taxable as Construction of Residential Complex Service (CRCS).

¶ 2 · ¶ 3 · ¶ 9.1

The appellant had earlier challenged a separate demand for April 2007 to March 2011, which the Tribunal set aside, holding that the CRCS demand did not survive in light of Larsen & Toubro.

¶ 2 · ¶ 3 · ¶ 9.1

The Commissioner nevertheless confirmed the later demands. The appellant appealed, disputing both the extended limitation period and the CRCS classification.

¶ 4–7

02Issues

i.1. Whether the Revenue was justified in invoking the extended period of limitation for the demands

¶ 5(i)

ii.2. Whether the demands under CRCS confirmed in the impugned order were sustainable

¶ 5(ii)

03Law Applied

The Tribunal applied the principle in Nizam Sugar Factory v. Collector of Central Excise, 2006 (197) E.L.T. 465 (S.C.), that the extended limitation period cannot be invoked on the basis of the same allegations where an earlier notice had already raised them, absent a basis for alleging suppression or intent to evade tax.

¶ 3 · ¶ 9.1

It also relied on CCE & Cus., Kerala v. Larsen & Toubro Ltd., 2015 (39) S.T.R. 913 (S.C.), which informed the Tribunal’s earlier decision in the appellant’s case that the CRCS demand for the earlier period did not survive.

¶ 2 · 9.1

The Tribunal treated limitation as fundamental to the demand: if the extended period was not available, the confirmed demand could not stand.

¶ 9.1

04Reasoning

The later demands were based on the earlier show-cause notice, and the adjudicating authority identified no fresh supporting evidence establishing suppression, fraud, or intent to evade tax.

¶ 9.1

Applying Nizam Sugar Factory, the Tribunal found the extended period unjustified.

¶ 9.1

It also noted that the earlier order relied upon by the Revenue had been set aside, with the CRCS liability held not to survive.

¶ 9.2

Because the limitation defect defeated the demands and the underlying CRCS basis had also failed in the appellant’s earlier case, the impugned order could not be sustained.

¶ 9.1–10