No Extended Limitation Without Proof of Suppression: CESTAT Quashes CENVAT Credit Demand Against Rajasthan Housing Board

The Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has set aside a service tax demand of more than Rs. 52 lakh raised against the Rajasthan Housing Board, holding that the Revenue cannot invoke the extended period of limitation in the absence of allegations or evidence of fraud, collusion, or suppression of facts. The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) ruled that the department failed to establish the mandatory conditions required under the proviso to Section 73(1) of the Finance Act, 1994 for invoking the extended limitation period. The Rajasthan Housing Board, a state instrumentality responsible for providing housing accommodation in Rajasthan, had launched various affordable housing schemes targeting low and middle-income groups. Under one such scheme, it awarded a work order in August 2006 to a contractor for construction of 2,976 flats at Sanganer in Jaipur. Out of these, 332 flats were completed and possession was handed over prior to July 1, 2012. Service tax related to these construction services was later paid by the contractor during December 2013 to March 2014, and the Housing Board availed CENVAT credit amounting to about ₹51.21 lakh on the service tax reimbursed to the contractor. The Board also discharged service tax liability on the output service when the flats were sold and payments were received from buyers. During an audit, the department observed that the Housing Board had availed CENVAT credit of service tax paid on construction services that were received prior to July 1, 2012. On this basis, a show cause notice dated February 14, 2017 was issued proposing recovery of around ₹52.21 lakh along with interest and penalties. The department argued that the credit was irregular because the Housing Board was not discharging service tax on construction of residential complex services before July 2012. It further alleged that the irregularity came to light only during audit and therefore the extended period of limitation should apply. The adjudicating authority confirmed the demand and the Commissioner (Appeals) upheld the order, prompting the Housing Board to approach the Tribunal. Before the Tribunal, the appellant restricted its arguments to the question of limitation. It contended that the credit was availed between December 2013 and March 2014, while the show cause notice was issued in February 2017, which was beyond the normal limitation period of 18 months applicable at the time. The appellant also pointed out that the credit had been duly reflected in the ST-3 returns filed with the department. Since the department already had these records, there could be no allegation of suppression or misrepresentation. The Tribunal carefully examined the contents of the show cause notice and found that it merely stated that the irregularity was detected during the audit. It did not contain any specific allegation of fraud, collusion, wilful misstatement, or suppression of facts, which are mandatory requirements for invoking the extended limitation period. The bench emphasized that incorrect self-assessment or detection of an issue during audit does not automatically justify invoking the extended period. It also observed that the department already had access to the relevant information through the ST-3 returns filed by the appellant. Therefore, the claim that the irregularity would not have been discovered without audit was not sufficient to establish suppression of facts. The Tribunal further noted that the Rajasthan Housing Board is a state instrumentality involved in implementing welfare housing schemes, and previous judicial precedents have held that allegations of suppression or intent to evade tax cannot be casually attributed to such entities without clear evidence. Concluding that the department failed to establish the statutory requirements for invoking the extended period of limitation, the Tribunal held that the demand was time-barred. The CESTAT set aside the impugned order and allowed the appeal filed by the Rajasthan Housing Board, granting consequential relief. Case Details Case Title: M/s. Rajasthan Housing Board Versus Additional Commissioner Citation: JURISHOUR-263-CES-2026(DEL) Case No.: Service Tax Appeal No. 50180 Of 2019 Date: 09.03.2026 Counsel For Appellant: B.L. Narasimhan and Ms. Srishti Yadav, Advocates Counsel For Respondent: V.K. Jain, Authorised Representative Click Here To Read Order Read More: CBIC Grants NFSG (Additional Commissioner Grade) to IRS Officer Sameer Wankhede with Retrospective Effect from 2021

No Extended Limitation Without Proof of Suppression: CESTAT Quashes CENVAT Credit Demand Against Rajasthan Housing Board

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