2024 (8) TMI 786 - AT - Service Tax

Invocation of Extended period of limitation - suppression of facts or not - income of service provider shown in the Income Tax Return - HELD THAT - The present case was initiated on the basis of the income tax documents, which were neither produced nor seized from the custody of the appellant but were in the realm of public documents, and the presumption is on the truthfulness of the documents. The reliance placed by the appellant on the decision in Vatsal Resources Pvt. Ltd. (supra) is not applicable, as in the said case, the documents were recovered from the office premises of another company, which not accepted as an admissible piece of evidence. Difference in the value, on the basis of ITR and the ST-3 Returns - mis-statement of facts - HELD THAT - The Department has proceeded in the present case on the basis of the information received from the Income Tax Department relating to the income from the provision of services shown in the ITR as well as income on which TDS has been deducted and the gross amount of value of service shown in the ST-3 Returns was provided. The Tribunal in the case of VATSAL RESOURCES PVT LTD VERSUS C.C.E. S.T. -SURAT-I 2022 (7) TMI 718 - CESTAT AHMEDABAD , following the earlier decisions in line, observed that by relying on the TDS/26-AS statements, the demand of service tax under the Service Tax Act cannot be made. There is no quarrel to the settled principle that amounts shown in the ITRs or Balance Sheets are not liable for service tax, however, here the conduct of the appellant cannot be ignored as he failed to provide the documents when asked for by the Department - Moreover, the plea taken by him for this discrepancy was only a bald reasoning without any supporting evidence. In the facts and circumstances of the present case, the impugned demand is confirmed. Since the differential tax liability upheld, the interest liability automatically accrues under Section 75 of the Act. The appellant having suppressed the correct taxable income from the department which was ascertained on the basis of the data received from the Income Tax Department. Consequently, the penalty imposed on the appellant is upheld. There are no reason to interfere with the impugned order - appeal dismissed.

Summary

Issues:
1. Challenge to order confirming demand raised in show cause notice.
2. Allegation of suppression of facts and contravention of Act/Rules.
3. Differential tax liability based on income declared in ITR and ST-3 Returns.
4. Burden of proof on Department.
5. Applicability of extended period of limitation.
6. Difference in valuation between ITR and ST-3 Returns.
7. Failure to cooperate with Department.
8. Interest and penalty imposition.

Analysis:
The Appellate Tribunal CESTAT NEW DELHI heard an appeal filed by M/s. B. Electrical Company challenging the confirmation of demand in a show cause notice. The appellant was registered under Service Tax Rules for various services not covered under the negative list. The case arose from data received by the Central Excise Department, leading to a show cause notice for service tax demand based on income declared in Income Tax Returns. The appellant contested the demand, arguing against the burden of proof on the Department and invoking the extended period of limitation. The appellant claimed that service tax should be levied on service value, not income, and disputed the allegation of suppression of facts.

The Adjudicating Authority noted discrepancies in turnover between ITR and ST-3 Returns, with the appellant admitting differences due to security deposits. The appellant's lack of cooperation with the Department regarding income tax records was highlighted. The Tribunal rejected the appellant's argument regarding burden of proof, citing precedents and the nature of the documents involved. The difference in valuation between ITR and ST-3 Returns was deemed a misstatement of facts, not suppression, based on case law distinctions. The Tribunal upheld the demand based on the information received from the Income Tax Department and the admitted discrepancies by the appellant.

The Tribunal confirmed the differential tax liability, leading to the automatic accrual of interest under the Act. The penalty imposed on the appellant for suppressing correct taxable income was upheld. The Tribunal found no reason to interfere with the impugned order, ultimately dismissing the appeal on 8th August, 2024.