The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax information derived from the income-tax returns (ITR) solely cannot be made the basis to confirm the demand of service tax.
The bench of Ajay Sharma (Judicial Member) has observed that Information derived from the income-tax returns solely cannot be made the basis to confirm the demand of service tax herein by invoking the extended period of limitation as the department has failed to bring on record any positive act or malafide intention on the part of the appellant to evade the service tax.
The appellant is a Psychoanalyst, Psychotherapist and a Mental Healthcare professional and is providing related healthcare services. The appellant is also assisting doctors and psychiatrists in providing mental healthcare to their patients including patients in emergency situation/ serious crisis situation.
The entire case of Revenue is based upon the Income Tax Returns filed by the appellant with the Income Tax Department. On examination of the data provided by the Income Tax Department it was found by revenue that although the appellant has declared his income under direct tax but since the same was not covered under the negative list of services inserted in the Finance Act, 1994 vide Section 66D ibid w.e.f. 1.7.2012 as per notification no. 19/2012-ST, dated 5.6.2012, it was liable for service tax and despite that no service tax was paid by the appellant.
As per revenue the appellant is providing taxable service but not obtained any service tax registration and accordingly best judgment method was applied for raising demand for the period October, 2014 to June, 2017.
After invocation of extended period, a show cause notice to that effect was issued to the Appellant on 30.12.2020 demanding service tax amount of Rs.16,59,494/- alongwith interest and penalties under various provisions of Finance Act, 1994 which culminated in the Adjudication Order i.e. Order-in-Original dated 23.1.2023 confirming the demand of Rs.10,47,270/- after scrutinizing the documents submitted by the appellant, alongwith interest and penalties. On appeal filed by the appellant, the same was dismissed by the 1st appellate authority by way of impugned order.
The tribunal while allowing the appeal held that a show cause notice issued on the basis of presumption and third-party information without examining the books of account and records of an assessee is not sustainable.
Case Details
Case Title: Sarosh Homi Forbes Versus Commissioner Of Central Goods And Service Tax-Mumbai South
Case No.: SERVICE TAX APPEAL No.85287 OF 2024
Date: 13.03.2025
Counsel For Appellant: Sushasnt Murthi
Counsel For Respondent: A.P. Singh
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