Information From ITR/26AS Can't Be Sole Basis For Service Tax Demands: CESTAT
Mariya Paliwala
4 March 2024 5:45 AM GMT
The Hyderabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the service tax demand was made on the basis of third-party data, i.e., amounts reflected in income tax returns and in Form 26AS, which is not sustainable. The bench of P. Anjani Kumar (Technical Member) has observed that the exigibility of service tax depends on the service provider,...
The Hyderabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the service tax demand was made on the basis of third-party data, i.e., amounts reflected in income tax returns and in Form 26AS, which is not sustainable.
The bench of P. Anjani Kumar (Technical Member) has observed that the exigibility of service tax depends on the service provider, service rendered, service recipient, and the consideration thereof. Unless these four elements have been connected logically, the demand for service tax cannot be confirmed merely on the basis of figures reflected in other statutory records.
The appellant/assessee is engaged in training interested candidates in the art of moviemaking, which is exempt under S.No.8 of the Mega Exemption Notification. Though the Commissioner (Appeals) has given relief on account of exempted turnover of Rs. 9,85,322, he confirmed demand on turnover of Rs. 26,64,021.
The department has raised a demand on the basis of the income from the sale of services shown in the balance sheet and the ITR returns. The appellant/assessee stated that there was a mistake in reflecting cash deposits under the heading 'Sale of service' and the same has been corrected by filing a revised ITR.
A show cause notice seeking service tax was confirmed.
The appellants contended that though the figures indicated in income tax returns and ST3 returns were tallying, the department has raised demand on the basis of statement 26AS. The statement in 26AS includes the payments received for the services rendered in the previous year that were ignored by the adjudicating authority as well as the appellate authority.
The department contended that the appellants could not explain the cash deposits so claimed by them in spite of giving them a number of opportunities. No proof of acceptance of the revised ITR filed by them has also been given. Under the circumstances, the adjudicating and appellate authorities had no option but to confirm the demand raised.
“I find that this is not the correct approach; the exigibility of service tax depends on the service provider, service rendered, service recipient, and the consideration thereof. Unless these four elements have been connected logically, the demand for service tax cannot be confirmed merely on the basis of figures reflected in other statutory records. Be it pre- or post-Negative List regime, the Department is under obligation to prove that the appellants have rendered such and such service to such and such persons and that consideration was received towards the rendering of such service. Without doing the same, demand merely on the basis of figures does not survive,” the CESTAT said while allowing the appeal.
Counsel For Appellant: R. Raghavendra Rao
Counsel For Respondent: K. Srinivas Reddy
Case Title: M/s GopiChenna Versus Commissioner of Central Tax Medchal - GST
Case No.: Service Tax Appeal No. 30412 of 2023
