2018 (11) TMI 1522 - AT - Service Tax

Levy of Service tax - demand has been confirmed on the basis of income surrender before the Income-Tax Department - services or not - Held that - The income surrendered with the Income-Tax Department cannot be the turnover of the service provided by the appellant, in the absence of any evidence placed on record by the Revenue that the income or turnover is on account of services provided by the appellant. The demand on account of income surrendered with the Income Tax Department cannot be confirmed against the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand confirmed based on income surrender before the Income-Tax Department.

Analysis:
The appellant appealed against an order confirming a demand based on income surrender to the Income-Tax Department. The appellant had surrendered a significant income during a survey by the Income-Tax Department, and the Revenue alleged that the amount pertained to services provided by the appellant. A show cause notice was issued, leading to the confirmation of service tax demand, interest, and penalties. The appellant contended that the burden was on the Revenue to prove that the surrendered income was earned from taxable services, citing a Tribunal decision in a similar case. The Revenue, however, supported the findings of the Commissioner (Appeals).

Decision:
After hearing both parties, the Tribunal held that the income surrendered to the Income-Tax Department could not be considered as turnover from services provided by the appellant. The Tribunal emphasized the lack of evidence from the Revenue linking the surrendered income to services provided by the appellant. Citing a previous Tribunal decision, the Tribunal concluded that without evidence linking the surrendered income to services, the demand for service tax could not be upheld. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.