2018 (9) TMI 1501 - AT - Service Tax

Manpower Supply Services - entire case of revenue is based upon the comparison of bank account figures with the ST-3 returns - Held that - There is no requirement under the law to maintain separate bank account for the services to be provided by the assessee. As such in the absence of any evidence against the appellant, there is no merits in the revenue s stand - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Discrepancy in bank account and ST-3 returns leading to service tax demand.
2. Appellant's defense of funds in bank account being from land sale and Income Tax refund.
3. Rejection of appellant's plea by lower authorities.
4. Revenue's case based on assumptions without concrete evidence.
5. Lack of requirement for separate bank account for taxable services.

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved a case where the appellant, engaged in providing Manpower Services, faced a service tax demand due to a significant amount found in their bank account not reflected in their ST-3 returns. An audit revealed a substantial sum in the bank account, leading to proceedings initiated against the appellant for non-disclosure of income. The appellant contended that the amount in question was from the sale of land and an Income Tax refund, supported by evidence including certification from the land buyer. However, the lower authorities rejected this defense, resulting in the confirmation of the service tax demand and imposition of penalties.

The Tribunal scrutinized the revenue's case, which primarily relied on the comparison of bank account figures with ST-3 returns. It highlighted that the revenue's assumption that the unaccounted amount in the bank account pertained to taxable services provided by the appellant lacked concrete evidence. The Tribunal emphasized that mere differences in bank account balances do not automatically imply undisclosed income from taxable services. It noted that operating a bank account with funds from various sources, such as other jobs or transactions like land sales, does not necessitate a separate account for taxable services under the law.

Ultimately, the Tribunal found the revenue's stance unsubstantiated and based on presumptions, lacking factual support against the appellant. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief for the appellant. This judgment underscores the importance of concrete evidence and legal requirements in establishing tax liabilities, cautioning against drawing conclusions based solely on financial comparisons without sufficient proof of taxable income origins.