TMI Blog2014 (8) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... period of limitation by issuing a Notice in the year 2013. Where the documents were examined and a view was formed in 2010 that there is no case for demanding service tax and accordingly closure of inquiry was ordered, merely because the authorities subsequently change their view that does not justify invoking the larger period of limitation. It has been consistently held that a subsequent change of view by the authorities would not justify invoking the larger period of limitation. Commissioner while dealing with the issue of larger period of limitation, has completely ignored the fact that apart from the Appellants records being audited by the department on as many as four occasions, the DGCEI itself had after examining the documents arrived at a conclusion that service tax was not payable and ordered closure of the inquiry. There is no basis for the Commissioner s finding that the Appellants were aware that the expenses recovered under the debit notes from the traders-purchasers were liable to service tax under Business auxiliary service. Merely because after commencement of the DGCEI inquiry in November 2009, the Appellants started paying service tax in respect of such debi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 29-5-2008. While the goods were in warehouse, the Appellants sold 16 M.tons out of the said goods to R.A.Nariman Co P. Ltd who cleared the said 16 M.tons by filing ex-bond bill of entry. The said purchaser, R.A.Nariman Co. P. Ltd had placed purchase order dated 14-6-2008 on the Appellants, as per which the goods were agreed to be purchased at the rate of ₹ 87.50 per kg. . While raising the Invoice, the Appellants split the price into two viz.Rs.9,34,597/- and ₹ 3,88,859/- and issued a separate debit note for the amount of ₹ 3,88,859/- towards expenses incurred by the Appellants for Banking, L/C charges etc. In other words the said expenses were factored in the said rate of ₹ 87.50 per kg and a separate debit note was issued by the Appellants for the same. 5. It is in respect of the said debit notes raised by the Appellants towards the expenses of services such as Banking, L/C, Wharfage, Survey, etc that the department has raised a demand for service tax against the Appellants under the category of Business Auxiliary service under clause (iv) of Section 65 (19) of the Finance Act 1994. It is the case of the department that the Appellants have procu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ascertained the facts and having come to the conclusion that there was no case for demand of service tax and having ordered closure of the inquiry in the year 2010, it is not open to the department in the year 2013 to issue a Show cause notice alleging wilful suppression or mis-statement of facts merely because of change of view on the part of DGCEI. It is further submitted that the Service tax and central excise audit department had from time to time audited the Appellants records for the periods 2004-05 to 2009-10 and at no point of time it was contended that the Appellants were rendering business auxiliary service and in view of such audits undertaken from time to time there cannot be any scope for holding that there was wilful-suppression or mis-statement of facts by the Appellants. On merits, it was submitted that the transactions between the Appellants and the purchasers of the goods in the custom bonded warehouse were one of sale and purchase and merely because the Appellants gave a break-up of the price to separately show the expenses incurred by the Appellants towards banking, L/C charges etc., it cannot mean that the Appellants had rendered business auxiliary service. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot mean that larger period cannot be invoked. It was submitted that in respect of transactions with manufacturers, the Appellants had been paying service tax and reference in this behalf was made to an agreement dated 5-8-2010 (page 121 of the Appeal) made with one such manufacturer viz. Aquapharm Chemicals P. Ltd. as per which the Appellants had been appointed to perform various acts on behalf of the manufacturer and for which the Appellants were paying service tax. It was therefore submitted that service tax was also payable on the debit notes raised on purchasers who were traders. On the question of interpreting the nature of the transactions with the traders, reference was made to para 48 of the judgment of the Apex Court in the case of Bharat Sanchar Nigam Limited v UOI 2006 (2) STR 161 (SC) in which it is held that the seller and purchaser would have to be ad idem as to the subject matter of sale or purchase and the Court has to arrive at the conclusion as to what the parties had intended when they contracted and in arriving at a conclusion the Court would have to approach the matter from the point of view of a reasonable person of average intelligence. 10. We have cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly asked to collect from the office of the DGCEI all the records and documents submitted for the inquiry. In these circumstances, in our view there is no scope for invoking the larger period of limitation. The DGCEI having examined the documents and ascertained the facts and having come to the conclusion that there was no case for demand of service tax and having ordered closure of the inquiry in the year 2010, it cannot be held that there was cause for invoking the larger period of limitation by issuing a Notice in the year 2013. Where the documents were examined and a view was formed in 2010 that there is no case for demanding service tax and accordingly closure of inquiry was ordered, merely because the authorities subsequently change their view that does not justify invoking the larger period of limitation. It has been consistently held that a subsequent change of view by the authorities would not justify invoking the larger period of limitation. Reference can usefully be made in this behalf to the decisions in Jolly Electrical Industries v Commissioner of Customs- 2004 (174) ELT 460 (Tri-Mumbai), Gujarat Petrosynthese Ltd v CCE -1998 (102) ELT 293. When the DGCEI itself after ..... 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