2023 (9) TMI 77 - AT - Service Tax

Non-filing of ST-3 returns for the relevant period - mismatch in values declared in Form 26AS filed with Income Tax and the values declared in Service Tax Returns for the financial years 2015-16 and 2016-17 - Reverse charge mechanism - HELD THAT - The appellant has not filed service tax returns for the period from October 2015 to June 2017 and at the same time in para 2 of the show cause notice, it is stated that there was mismatch in the values declared in ST-3 returns and in the Income Tax Returns for financial years 2015-16 and 2016-17 - The contention of Revenue in para 2 is that there was mismatch of the values declared in Income Tax Return and Service Tax Returns and in the same show cause notice, Revenue states that the appellant had not filed any Service Tax Returns for the same period. There was non-application of mind for issue of the said show cause notice dated 27.04.2021. In addition, it is stated in para 4 of the said show cause notice that the appellant had not submitted the required details and not assisted in the investigation and that the details of turnover and bifurcation were not available with Revenue for issue of the said show cause notice and, therefore, Revenue has calculated service tax payable by the appellant under best judgment method. Further, for the period from April 2017 to June 2017, the said show cause notice considers gross taxable value presuming value addition of 25% over the relevant quarter of the earlier financial year, which is also a presumption. The said show cause notice dated 27.04.2021 is not sustainable in law. As a result, the impugned order-in-original is not sustainable - Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the mismatch in values declared in Form 26AS filed with Income Tax and the values declared in Service Tax Returns for the financial years 2015-16 and 2016-17, non-filing of Service Tax Returns, calculation of service tax payable, imposition of penalties and late fee, and the sustainability of the show cause notice.

Mismatch in values and non-filing of Service Tax Returns:
The appellant was issued a show cause notice due to a mismatch in values declared in Form 26AS and Service Tax Returns for the financial years 2015-16 and 2016-17. The notice alleged that the appellant had not filed Service Tax Returns for the entire period in question. The authorities calculated the gross taxable value based on turnover reflected in Form 26AS, leading to a demand for service tax. The appellant, a goods transport agency, argued that they did not collect service tax from customers and therefore should not be liable to pay. The original authority confirmed a demand for service tax, imposed penalties, and late fees for non-filing of returns.

Sustainability of the show cause notice:
The appellant challenged the impugned order, arguing that the original authority did not consider their submissions properly. They contended that the demand could not be sustained without evidence establishing that the income was for taxable services. The appellant cited previous tribunal orders to support their argument. Upon review, the Tribunal found contradictions in the show cause notice, noting discrepancies in the statements regarding filing of Service Tax Returns and mismatched values. The Tribunal held that the show cause notice lacked proper reasoning and application of mind, making it unsustainable in law. Citing a previous case, the Tribunal concluded that the show cause notice was not based on a proper examination of the appellant's records and was therefore invalid.

Conclusion:
After careful consideration of the case and submissions, the Tribunal found the show cause notice to be legally unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.