C.N.B. Nair, Member (T)

1. Heard both sides and perused the record. The stay petition is in regard to service tax demand and penalty.

The appeal was rejected by the Commissioner for the reason that the appellants failed to make pre-deposit as ordered.

2. The contention of learned Counsel for the appellants is that this is a case where any deposit would be unwarranted. He would point out that the demand was not sustainable and that the demand was barred by limitation. In support of his contention, he would rely upon the judgment of the Honble Supreme Court in the case of L.H. Sugar Ltd. reported in . On the question of limitation, it is being pointed out that the demand was raised under a show cause notice dated 21-5-2004 for tax due in 1998 which is even beyond the extended period permitted by law in regard to exceptional cases involving fraud, etc.

3. The learned SDR, however, contends that the demand is to be treated as raised during the normal period itself and that the demand is valid in the light of the decision of this Tribunal in the case of Mangalam Cement (Final Order Nos. 332-333/07, dated 30-5-2007) [2007 (7) S.T.R. 673 (Tribunal)]. He would point out that the Tribunal had considered the decision of the Supreme Court in the case of L.H. Sugar also while passing the above order.

4. A perusal of the record shows that the demand was raised by specifically invoking the extended period. Thus, it was not revenues case that the demand is sustainable if the normal period was applied. We also find that in L.H. Sugar case, the Honble Supreme Court had taken into account the amendment of law under the Finance Act, 2003 and had upheld the Tribunals decision on limitation.

5. In the above facts and circumstances, we are of the view that the Commissioner should go into the merits of the dispute without insisting on any pre-deposit. Accordingly, the stay application is allowed and the case is remitted to the Commissioner for a decision on merits of the dispute, without insisting on any pre-deposit.

(Order dictated in the open Court)