2017 (3) TMI 1104 - AT - Service Tax

Commercial Training or Coaching Service - demand - Held that - Since solely based on the statement given to the income tax department, the service tax department proceeded against the appellant and in view of the fact that the income tax demand raised by the department has been set aside/ settled by the Income Tax Tribunal, we are of the view that the present demand cannot be sustained against the appellant - Further, the department has not produced any evidence to show that the appellant has received any unaccounted for money towards providing the taxable service. Thus, the service tax demand cannot be confirmed without any tangible evidence - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of service tax demand based on income tax department's report.

Analysis:
The case involved the appellant engaged in providing 'Commercial Training or Coaching Service' facing service tax demand based on information from the income tax department regarding non-payment of income tax for the period 2007-2008. The appellant argued that the income tax demand was set aside by the Income Tax Appellate Tribunal, rendering the service tax demand unsustainable. The Tribunal found that the service tax department proceeded against the appellant solely based on the income tax department's report, without corroborative evidence of non-payment of income tax. Since the income tax demand was set aside by the Income Tax Tribunal due to lack of evidence, the service tax demand could not be sustained. The Tribunal noted the absence of tangible evidence showing the appellant received any unaccounted money for the taxable service, leading to the conclusion that the service tax demand lacked merit. Consequently, the appeal filed by the appellant was allowed, and the impugned order was set aside.

This judgment highlights the importance of corroborative evidence in tax proceedings and the need for tangible proof to support service tax demands. It underscores the principle that a demand cannot be confirmed solely based on a report without substantial evidence. The decision also emphasizes the significance of resolving related issues in other tribunals, such as the Income Tax Appellate Tribunal, to impact the outcome of service tax proceedings. Overall, the judgment sets a precedent for requiring concrete evidence to support tax demands and ensuring fair adjudication based on substantiated facts rather than unsubstantiated reports.