The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) had held that the burden lies on the department to prove service providers showing different taxable values to the Central Board of Direct Taxes (CBDT) and Central Board of Indirect Taxes & Customs (CBIC).
The bench of Rachna Gupta (Judicial Member) has observed that the document which has been relied upon by the department and has been used against the assessee was neither produced by the assessee nor has been seized from his premises or control. The observation is sufficient to hold that presumption as to document as available under Section 36A of Central Excise Act, 1944 is not applicable to the Directorate General of Shipping (DGS) and DM’s letter based whereupon the show cause notice was issued and the demand proposed and confirmed. The document is not at all admissible into evidence.
The appellant/assessee is registered for providing taxable services. Department had information that various service providers have shown different taxable values to the CBDT and CBIC in their returns filed by the respective departments. Based on the information, appellant was enquired and was asked to inform the reason behind the difference in turnover shown in ITR in relation to a taxable value declared in ST-3 returns during the Financial Year 2016-17.
The appellant was also enquired taxable value of service provided being received by the appellant, as to whether the same is exempted or is eligible for abatement of value remitted or for benefit of reverse charge to be extended or for determination of taxable value to be made under provision of Service Tax (Determination of Value) Rules, 2006 or for benefit of threshold limit; in terms of the Notification No. 25/2012, 26/2012, 30/2012 and 33/2012 respectively all dated 20.06.2012.
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Since no response was received from the appellant and that the activity of appellant was opined to be a taxable service that vide Show Cause Notice No. 3/2021 dated 21.10.2021 service tax amounting to Rs.8,86,822/- for Financial Year 2016 and 2017 was proposed to recovered along with the interest and the penalty.
Late fee for non-filing/late filing of service tax was also proposed to be imposed. The proposal has been confirmed. Appeal against the order has been rejected by the Commissioner (Appeals).
The appellant contended that the case against the appellant is exclusively based on letter dated 22.05.2019 of the Additional Director General (EDW), Directorate General System & Data Management, Customs & Central Excise, New Delhi and there is no other document nor any investigation which has been dealt with in the impugned show cause notice. The show cause notice otherwise has been beyond the normal period of limitation of 30 months. The extended period has wrongly been invoked as there is no evidence on record about the alleged suppression of vital facts. The findings under challenge are therefore erroneous and incorrect. The demand is liable to be set aside not only on the merits but also being barred by time.
The issue raised was whether the payment of Rs.59,12,145 reported as income from sale of service in the ITR of the appellant is taxable or not.
The tribunal noted that the demand in question has been confirmed purely based on third party document/information gathered from the Income Tax Department for Financial Year 2016-17.
The tribunal relied on the decision of Supreme Court in the case of Jaiprakash Industries Ltd. Vs. Commissioner of Central Excise, Chandigarh in which it was held that the demand based on Income Tax Returns and Form 26AS and/or Balance Sheet is not sustainable without proper enquiry and analysis. The decision has been followed by the Tribunal in the case of Calving Wooding Consulting Ltd. Vs. Commissioner of Central Excise, Indore.
The CESTAT while allowing the appeal held that there seems no enquiry nor any analysis to the basic aspect of nature of activity rendered by the appellant. Confirming demand, based on income tax data is therefore liable to be set aside.
Case Title: M/s. Joshi Tax Consultancy & Services v/s Commissioner of CGST & Central Excise, Dehradun
Case No.: Service Tax Appeal No. 55302 of 2023 [SM]
Date: 06.09.2024
Counsel For Appellant: R.M. Saxena
Counsel For Respondent: Arun Sheoran
