2019 (5) TMI 1248 - AT - Service Tax

Differences in the the figures reflected in the ST-3 returns and those reflected in Form 26AS - demand of service tax - HELD THAT - Revenue cannot raise the demand on the basis of such difference without examining the reasons for said difference and without establishing that the entire amount received by the appellant as reflected in said returns in the Form 26AS being consideration for services provided and without examining whether the difference was because of any exemption or abatement, since it is not legal to presume that the entire differential amount was on account of consideration for providing services. The SCN is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confirmation of service tax and penalty based on differences in ST-3 returns and Form 26AS without proper examination of reasons.
2. Legality of raising a demand without establishing that the entire amount received was consideration for services provided.
3. Presumption of differential amount as consideration for services without examining exemptions or abatements.

Analysis:
1. The judgment by the Appellate Tribunal CESTAT ALLAHABAD addressed the issue of confirming service tax and penalty amounting to ?93,000 based on differences between ST-3 returns and Form 26AS. The Tribunal noted that the Revenue had not examined the reasons for the differences before raising the demand. The appellants were registered with the Service Tax Department and were filing ST-3 returns. The Tribunal emphasized that the Revenue cannot raise a demand solely based on differences without establishing the reasons for such variations. It was observed that without further examination, it is not legal to presume that the entire differential amount was consideration for services provided. Therefore, the Tribunal found the show cause notice unsustainable and set aside the impugned order, ultimately allowing the appeal.

2. Another crucial aspect addressed in the judgment was the legality of raising a demand without proving that the entire amount received by the appellant was consideration for services provided. The Tribunal highlighted that the Revenue must establish that the amounts reflected in the returns were indeed consideration for services and not due to any exemptions or abatements. Merely presuming that the differential amount was entirely for services without proper examination was deemed impermissible by the Tribunal. This legal requirement was essential to ensure that demands were raised on a valid and substantiated basis, rather than on assumptions or incomplete assessments.

3. The Tribunal further delved into the issue of presuming the differential amount as consideration for services without examining potential exemptions or abatements that could have led to differences in the figures. By emphasizing the necessity of examining the reasons behind the variations in the financial records, the Tribunal underscored the importance of a thorough and comprehensive analysis before raising demands. The judgment highlighted that without establishing the nature of the differential amounts, including potential exemptions or abatements, it was not legally sound to attribute the entire difference to consideration for services. This aspect of the judgment aimed to ensure that demands were made based on a complete understanding of the financial transactions and legal provisions, rather than mere assumptions or incomplete assessments.