Service tax issue

Dear Members,

One of my client have registered under Service Tax  Business Auxulury catagory being a service provider in the year 2004.

He has filled returns for the year 2007-2008 and paid the dues for this period only on 6/5/2009. But not filled the returns and not paid the dues for rest of the period till date.

He has never billed service tax in invoice and not collected the service tax from his clients. He is totally unaware that the service tax has to be collected and to be paid to the department, nor the client had informed him to do so.

Form the date of registration till June 2009 department has not issued any letters notice to pay the dues or file the returns.

The department has issued several letters and reminders asking for information of the business in the month of June 2009. To this he have not replied, hence the department issued Summons u/s 14 of the Central Excise.

He then provided the details required the department. On receipt of these information the department verbally demanded the settlement amount from the period 2007-2008 till 2009-2010.

Now my query is;

1. I want to know for how many earlier years the department can demand for clearance of dues. 

- Five Years or from last audit done. 

2. Secondly, if he pays off the dues in full, whether the department has powers to re-open the case and demand for more?

- If the case is handled by your Range officer then after submission of returns and clearence of dues with interest and penalty, he will make assessment and intimate you in writing about the same. 

3. How to be ensure that the case is closed once the payment is done. Is there any procedure / documentations / forms so that the case will not be re-open again.

- Range Superintendent will make assessment and inform u in writing, however audit and can visit u to complete the formalities.

4. In case the department can demand verbally to pay off the dues?

- No, they will forward the case to Range officer who will issue show cause and then make demand. 

5. Is filling of return for these years (2007-2008 to 2009-2010) is required?

- Yes 

6. Whether ther are powers to waive off the dues for earlier period and allow to pay only for last one year only.

- Officer may ignore the thing if his personal benefits are served, but ultimate relief he can not offer, department has multi tier administration to enforce the rules. 
7. Please give some link of such law case.

8.What is the time limit to issue showcaue notice.  

- within 60 days from the date of statement.

9. He was totally unaware of collecting and payment of dues. He came to know only when he received the letter from the department. In this case whether what deparmtent can do in the benefit of the client.

- No, service tax registration applied by party, entitles himself that he is aware of the rules and is bound to maintain.

We expect the reply at the earliest.

Thank you.