CESTAT Quashes Service Tax Demand Based Solely On Income Tax Data In Form 26AS
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that the service tax demand cannot be based solely on Income Tax Data in Form 26AS without establishing receipt of consideration. The Bench of Dr. Rachna Gupta (Judicial Member) stated that “Revenue cannot raise the demand on the basis of difference in the figures reflected in the...
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that the service tax demand cannot be based solely on Income Tax Data in Form 26AS without establishing receipt of consideration.
The Bench of Dr. Rachna Gupta (Judicial Member) stated that “Revenue cannot raise the demand on the basis of difference in the figures reflected in the ST-3 returns and those reflected in Form 26AS without examining the reasons for said difference and without establishing that the entire amount received by the appellant as reflected in the Form 26AS is the consideration for services provided and without examining whether the difference was because of any exemption or abatement”.
The assessee/appellant is engaged in providing Erection, Commissioning and Installation Service and Maintenance or Repair Service to various telephone service providers.
During the course of audit of the assessee record for the period from April 2016 to March 2017 the difference in the taxable value shown in ST-3 returns from the income booked in the statutory record like balance sheet vis-à-vis job work receipt for the said period was observed by the department and the assessee was found to have not paid service tax on the amount of the said difference.
A show cause notice was issued to the assessee demanding service tax along with interest and penalty. The demand was confirmed by the adjudicating authority. An appeal was filed against the order of adjudicating authority which was rejected.
The assessee submitted that demand of service tax based on the income tax returns/any third party data is not sustainable.
The Tribunal observed that “vide reply to Show Cause Notice dated 16.07.2021 it was conveyed that the assessee did not receive the payment of the amount of invoices due to some dispute in relation to billing. Department has failed to produce any evidence to falsify the said contention. Resultantly, the situation remains is that there is no amount of consideration received. Hence the activity of appellant fails to fall under the scope of definition of service given under Section 66B of the Finance Act, 1994, rendering of activity has to be quid pro quo of considering for it to be called as taxable service defined under Section 66B(44) of the Finance Act. In absence thereof, question of leviability of service tax does not arise.”
The Tribunal noted that the only document based whereupon the demand has been confirmed is from 26AS from Income Tax Department.
The bench held that department has failed to prove its case against the assessee. The reliance of 26AS as the basis of demand is not permissible.
In view of the above, the Tribunal allowed the appeal.
Case Title: M/s Shree Ganesh Telecom Pvt. Ltd. v. Commissioner (Appeals), Central Goods & Service Tax & Central Excise, Indore
Case Number: Service Tax Appeal No. 50211 of 2024
Counsel for Appellant/ Assessee: Pankaj Sethi
Counsel for Respondent/ Department: Anuj Kumar Neeraj