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2023 (7) TMI 56 - AT - Service TaxLevy of service tax - work contract Services to the State Government, local authority or governmental authority and also to private parties by way of construction of road, bridge, tunnel, ponds or irrigation work, Repairs and Maintenance of civil structure etc. - eligibility for exemption by Service Tax Notification No. 25/2012-ST vide Sr. Nos. 12(d),12(e), 12A(a), 13(a)and 29(h) - Extended period of limitation - HELD THAT - It is settled by now that without conducting any independent inquiry or investigation, the demand of Service Tax can not be sustained only on the basis of 26AS data provided by the Income Tax authorities to the Central Excise Officers at Bhavnagar. Service Tax demand cannot be raised on the basis of assessment by the Income Tax Authorities. There is no dispute on the fact that Show Cause Notice for demand of the Service Tax is solely on Data/TDS/26AS of Appellant in Income Tax Returns for the FY 2015-16 to 2016-17, which are shared by Income Tax authorities. Declarations under Income Tax Act are Annual Consolidated Tax Statements. Income Tax and Service Tax are two different separate and independent special Central Acts and their provisions are operating in two different and independent fields. By relying only on 26AS data of Income Tax, demand of Service Tax cannot be made. The Tribunal in case of COMMISSIONER OF C. EX., JAIPUR-I VERSUS TAHAL CONSULTING ENGINEERS LTD. 2017 (1) TMI 657 - CESTAT NEW DELHI has held that demand of Services Tax on the basis of TDS /26AS statements/3CD Statements are not sustainable. The demand of Services Tax on the basis of shared data of TDS/26AS/3CD statements are not sustainable. It is noted that it is settled that Service Tax demand cannot be raised only on the basis of any such assessment made by the Income Tax Authorities. Information or data or documents relied upon loses its evidentiary value in absence of any independent inquiry which was mandatorily required to have been conducted by concerned officers of Central Excise department at Bhavnagar, before issuance of the Show Cause Notice dated 19-04-2021 - the data provided by Income Tax authorities simply show the details of Income received from sale of services and Service Tax paid thereon. However, in Income Tax Returns, no further details of exemptions availed on services requires to be declared, hence, there may be mis-matched in data of Income tax vis- -vis Service Tax Returns filed, depending facts of cases. In present case, department has failed to do so. Section 65B(44) has provided definition of Service , but, various services were also placed in Negative list u/s 66D, not attracting Service Tax and there weremany Services which were allowed Exemptions from Service Tax under Notification No. 25/2012-ST and many such other Notifications issued. Hence, it is impermissible under law to issue any baseless SCN on assumption or presumptions and later on, SCN can be improvised by O-I-O in adjudication - It was necessary for Department to specify activity and nature of service that was to be taxed under specific clause of services or declared services described in the Finance Act 1994. The case laws cited by the appellant hold that Revenue cannot argue a case which was not made out in SCN and adjudicating authority cannot travel beyond the SCN, as the law settled by plethora of decisions by Tribunals, and higher forums. The decisions relied upon by Appellant support this view. Settled law is that the exemption should be interpreted strictly, but, when eligibility criteria of availing exemption is proved, liberal interpretation should be adopted to allow substantive benefit of an exemption for the assessee for whom exemption is intended to be allowed. Eligibility criteria in this case is providing services to Government Authorities in public work on Roads, Bridges etc, which is not denied in this O-I-O. Appellant has given detailed clarification and documents for services and submitted that they are eligible for exemption by clause No. 12(d), 12(e), 12A(a), 13(a) and 29(h) of Notification No. 25/2012-ST which allows the exemption in services provided to the Government, a local authority or a governmental authority. O-I-O has erred in confirming Service Tax demand on the sale transactions for FY 2015-16 with M/s kunal Enterprise for sale of Black Trap and with M/s Vijay Construction for sale of Asphalt . Extended period of limitation - HELD THAT - Department was fully aware of the facts that Appellant had paid Service Tax and filed ST-3 Returns for FY 2015-16 to 2016-17 intimating their claim of Exemption of Notification No. 25/2012-ST, department should have objected on availment of exemption within normal time limit, if revenue had any doubts on the availment of exemption. This being a case of interpretation of provisions, charge of suppression of facts, willful misstatement, fraud, etc., cannot be leveled, for initiation of SCN beyond the normal time limitation. It is settled law that there must be deliberate attempt by the Appellant to suppress the facts from Department with an intention to evade payment of Service Tax, which is not existing in this case - the entire demand for FY 2015-16 to 2016-17 raised by the SCN dated 19-04-2021confirmed by impugned O-I-O against Appellant deserves to be set aside on this ground of limitation. When demand of Service Tax is not sustained on merits as well as on time limitation in the facts of this case and when we have examined case from all possible angles, it is not necassry to go into details of other points raised against Order-in-Original by Appellant like computing Cum-Tax-Value for Service Tax demand, though such points may have substantial force in favour of Appellant. The demand of the Service Tax confirmed by the adjudicating authority as well as imposition of interest and penalties also deserve to be set aside - appeal allowed.
Issues Involved:
1. Service Tax Liability for FY 2015-16 to 2016-17 2. Basis of Service Tax Demand 3. Eligibility for Exemption under Notification No. 25/2012-ST 4. Validity of Show Cause Notice (SCN) 5. Time Limitation for Issuance of SCN 6. Imposition of Interest and Penalties Summary: 1. Service Tax Liability for FY 2015-16 to 2016-17: The core issue was whether the Appellant owed Service Tax for the financial years 2015-16 and 2016-17. The Appellant, a registered service provider, claimed to have paid Service Tax and filed all statutory ST-3 Returns, asserting that services provided to government authorities were exempt under Notification No. 25/2012-ST. 2. Basis of Service Tax Demand: The demand was based solely on the 26AS data shared by Income Tax authorities, which the Tribunal found insufficient. It was held that "Service Tax demand cannot be raised on the basis of assessment by the Income Tax Authorities" without independent inquiry or investigation. 3. Eligibility for Exemption under Notification No. 25/2012-ST: The Appellant argued that services provided to government authorities were exempt under various clauses of Notification No. 25/2012-ST. The Tribunal noted that the adjudicating authority failed to correctly appreciate that the services provided were indeed eligible for exemption, as the Appellant had provided sufficient documentary evidence. 4. Validity of Show Cause Notice (SCN): The Tribunal found that the SCN was issued without proper verification of the Appellant's ST-3 Returns and without specifying the exact sub-heading under which the service falls. It was emphasized that "orders beyond the scope of SCN are not sustainable." 5. Time Limitation for Issuance of SCN: The Tribunal held that the SCN was issued beyond the normal period of limitation. The Appellant had filed all necessary returns and had been audited without objections. The Tribunal cited multiple precedents to support that there was no deliberate attempt to suppress facts, making the extended period inapplicable. 6. Imposition of Interest and Penalties: Given that the demand was not sustained on merits and was time-barred, the Tribunal also set aside the imposition of interest and penalties. It was noted that the Department did not provide any "clinching positive evidence" of mala fide intentions by the Appellant to evade tax. Conclusion: The Tribunal concluded that the demand of Service Tax, along with interest and penalties, was unsustainable. The impugned Order-in-Original was set aside both on merits and on the ground of limitation, and the appeal filed by the Appellant was allowed with consequential relief in accordance with the law.
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