2022 (3) TMI 1320 - CESTAT AHMEDABAD

Levy of service tax - Construction of Residential Complex Services/ Construction of Commercial Complex Services - corroborative evidence is produced by the department to show that the Appellant have received unaccounted cash towards provision of construction services during the disputed period or not - Reliability on the statements - Admissible evidence or not - Jurisdiction to issue SCN - penalties on co-appellant - HELD THAT:- The revenue has proceeded in confirmation of the demand on the basis of documents and information provided by the Income Tax Department. The entire case of Revenue in the present matter is based on .xls sheets retrieved by the Income Tax Authorities and Statement of Smt. Kalindi Shah recorded by the Income tax Authorities. However, it is seen that apart from recording the statement of Shri Venkataramana Ganesa in the present matter no independent investigation has been carried out by the department. We observed that Department has not brought out any independent facts or evidence as who is the service receiver, whether the cash receipts shown in the xls. Files pertaining to the service component only or otherwise and no corroborative evidence produced in support of details mentioned in the said xls. Files. In the present matter collection of a huge amount of cash in respect of provisions of services involved. However not a single rupee of unaccounted cash was found during the search conducted by the income tax.

Reliability on the statements - Admissible evidence or not - HELD THAT:- In the whole matter revenue rely upon the statement of Ms. Kalindi Shah and Shri Venkataramana Ganesna both are the employees of the Assessee’s company. No statement of Directors of the Appellant company recorded by the revenue to find out the truth of employee’s statements. It was on records that Assessee company have raised the dispute on both the statements of employees recorded during the course of investigation by Income tax Authority and revenue. Therefore the said statement cannot be relied upon as admissible evidence in terms of the provisions of Section 9D of the Act.

In the present case the Revenue has raised the Service tax demand merely on the ground of investigation conducted by the Income Tax Authorities. We find that demand cannot be raised merely on the basis of assessment made by the Income Tax Authorities. Tribunal in the case of M/S. RAVI FOODS PVT. LTD. & OTHERS VERSUS CCE, HYDERABAD [2010 (12) TMI 290 - CESTAT, BANGALORE] has held that admission by assessee to Income Tax department as regards undisclosed/suppressed sales turnover cannot be held to be on account of clandestine removal of their final products, in the absence of any other corroborative evidence.

In the present matter entire demand of service tax as proposed in the show cause notice is not sustainable.

Construction of Residential Complex Service/ Construction of Commercial Complex Service - period from 01.04.2014 to 30.06.2017 - Ld. Adjudicating Authority in present case dropped the demand on the ground that in all cases where the assessee have entered into a sales deed or an Agreement to sale prior to 01.04.2014, the amount have been received prior to the said date - HELD THAT:- The Ld. Adjudicating Authority failed to extend the same logic where the booking amount is received by cheque and the letters of reservation have been issued prior to 01.04.2014. The demand of Service tax confirmed by the Ld. Adjudicating authority pertaining the period where the letters of reservation have been issued prior to 01.04.2014 and cheque received by Appellant prior to 01.04.2014 not sustainable on this ground.

The Revenue could not establish the charge of cash receipt beyond doubt, accordingly entire demand raised in the Show Cause Notice will not sustain even without going to the grounds of the department’s appeal - the Adjudicating Authority with careful application of mind dealt with the issue on facts and statutory provisions for dropping of part demand. Therefore, we do not find any infirmity in the finding of the impugned order, except the finding on receipt of cash. Accordingly, the same is upheld to the above extent. Consequently, the Revenue’s appeal is liable to be dismissed.

Jurisdiction - whether the DGGI has power to issue show cause notice? - HELD THAT:- The entire case is decided on its fact and merit, we do not address the issue of jurisdiction and the said issue is left open.

Penalties imposed on co-appellants - HELD THAT:- The demand itself is not sustainable against the main Appellant, hence the question of penalties on co-appellants does not arise.

Decided in favor of assessee.