2024 (5) TMI 889 - AT - Service Tax

Extended period of limitation - suppression of facts from department with intent to evade payment of service tax - calculation of amount of income - SCN issued based upon the third party information received from the Income Tax Department - want of the requisite documents - HELD THAT - The contention of learned departmental representation about intentional cutting in the dates of the invoices on record is also held not relevant for the present purpose as the show cause notice apparently has included the receipts for at longer period than the impugned period of July 2012 to March 2013. This discussion is sufficient to hold that the appellant had produced sufficient evidence to falsify the contentions raised in the show cause notice. Above all, the demand has been raised merely on the basis of Form 26AS as was supplied by Income Tax Department which records altered dates as mentioned on the invoice. Apparently and admittedly no further investigation has been conducted in this case at the end of appellant by the adjudicating authority. Appellant being a registered service provider is filing the ST-3 returns, demand cannot be raised on the basis of Form 26AS. The difference in figures reflected in ST-3 returns and Form 26AS filed under Income Tax Act can also not be the basis for raising service tax demand without examining the reasons for such difference and without examining as to whether the amount which is reflected in income tax return was the consideration for providing any taxable services or the difference was due to any exemption or abatement. The demand cannot be confirmed. Finally it is observed that the original adjudicating authority has acknowledged receiving ST-3 returns filed by the appellant and the deposit of service tax as was self-assessed by the appellant, the same is sufficient to falsify the alleged suppression, on the part of the appellant. The decision of M/S KALYA CONSTRUCTIONS PRIVATE LIMITED VERSUS THE COMMISSIONER, CENTRAL EXCISE COMMISSIONERATE, UDAIPUR 2023 (12) TMI 1211 - CESTAT NEW DELHI is applicable to the facts of the present case, where it was held that ' It is a well settled legal principle that the adjudicating authority cannot travel beyond the SCN. Therefore, he could not have confirmed the demand under the provision after 01.07.2012. Under these circumstances, it is found that the demand in the impugned order is not sustainable and needs to be set aside. Consequently, the demand of interest and the penalties imposed also need to be set aside.' Support drawn for decision of Hon'ble apex Court in the case of Anand Nishikawa Co. Ltd. versus CCE, Meerut 2005 (9) TMI 331 - SUPREME COURT where it has been held that 'In the present case, appellant was regularly filing returns and there is no evidence of any such positive act of appellant as may reveal the malafide intention of appellant to evade tax.' The extended period is, therefore, held to have been wrongly invoked. Decision in M/s Kalya Constructions Pvt. Ltd. is held to cover the impugned issue. The impugned order is set aside - appeal allowed.

Issues:
1. Service tax liability calculation based on third party information.
2. Failure to provide requisite documents by the appellant.
3. Invocation of extended period of limitation for show cause notice.
4. Discrepancies in the amount received for taxable services.
5. Treatment of parts replaced during maintenance services.
6. Consideration of intentional cutting in invoice dates.
7. Reliance on Form 26AS for raising service tax demand.
8. Difference in figures between ST-3 returns and Form 26AS.
9. Eligibility for Small Scale Industry (SSI) exemption.
10. Alleged suppression of facts by the appellant.

Analysis:
1. The case involves the calculation of service tax liability based on third party information received from the Income Tax Department. The appellant, engaged in providing taxable services, failed to submit requisite documents, leading to the proposed demand of Rs. 4,25,665/- for the financial year 2012-2013. The show cause notice invoked the extended period of limitation due to alleged suppression of facts by the appellant.

2. Despite multiple opportunities, the appellant did not provide necessary documents before the issuance of the show cause notice. The appellant's response and submission of documents post-remand were considered by the tribunal. The appellant's failure to submit relevant documents like payment ledger, Form 26AS, and invoices was highlighted as a key factor in confirming the demand.

3. The appellant disputed the invocation of the extended period of limitation, arguing that the department failed to prove suppression of facts. The tribunal observed that the appellant had regularly filed returns and found no evidence of willful suppression, leading to the conclusion that the extended period was wrongly invoked.

4. Discrepancies in the amount received for taxable services between the appellant's records and the show cause notice were noted. The appellant provided detailed documents showing a lower amount received for the disputed period, contradicting the department's calculations.

5. The treatment of parts replaced during maintenance services was debated, with the appellant claiming entitlement to abatement as the activity amounted to works contract service. The tribunal found the transfer of parts to be a transfer of property in goods, not forming part of the service value.

6. The intentional cutting in invoice dates was raised by the department as evidence of misrepresentation and suppression. However, the tribunal deemed this argument irrelevant as the show cause notice included receipts for a longer period than the disputed period.

7. The reliance on Form 26AS for raising service tax demand was challenged by the appellant, emphasizing that the demand should not be solely based on this form. The tribunal supported this argument, citing a previous decision where demand solely on Form 26AS was deemed insufficient.

8. Discrepancies between ST-3 returns and Form 26AS were discussed, highlighting the need to examine reasons for differences before confirming service tax demand. The appellant's eligibility for SSI exemption was also acknowledged, further complicating the demand calculation.

9. The tribunal ultimately set aside the order under challenge, allowing the appeal based on the appellant's submission of detailed documents, discrepancies in the amount received, and lack of evidence supporting willful suppression. The decision emphasized the importance of proper evidence and examination before confirming service tax demands.

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