KANNIAH TRAVEL AGENCY Vs. COMMR. OF C. EX.

JUDGEMENT

(1.) THE lower authorities have demanded Service tax of Rs. 5,64,053/ - from the appellants in respect of "air travel agents service" rendered by them during the period April 1998 to October 2003 and have also imposed penalty of Rs 11,31,106/ - on them under the provisions of Finance Act, 1994. learned Counsel for the appellants submits that the demand of tax is hit by bar of limitation. The relevant show -cause notice was issued on 8 -6 -2004, demanding tax for the aforesaid period. It is submitted that the appellants and similar travel agents had filed Writ petitions in the High Court challenging Rule 2(d)(viii) of the Service Tax Rules, 1997 (as amended) against the above levy of Service tax, The Hon'ble High Court granted stay of operation of the said rule and accordingly, the department was not in a position to demand service tax on the aforesaid service. The Writ petitions were dismissed on 30 -4 -2001, till which date there was stay of operation of the above provision of law. The Commissioner of Central Excise and other jurisdictional officers were respondents to the Writ petitions and, therefore, they were aware of the facts of the case. Even after dismissal of the Writ petitions, the department did not choose to levy any tax on the aforesaid service and they took more than three years to issue the subject show -cause notice. The demand raised in that notice is beyond the normal period of limitation and in the absence of suppression of facts, the extended period of limitation was not invocable in this case. We have heard the learned SDR also who reiterates the finding recorded in the impugned order.

(2.) AFTER considering the submissions, we have found prima facie case for the appellants on the ground of limitation. Accordingly, there will be waiver of predeposit and stay of recovery in respect of the amounts of tax and penalty.