2025 (2) TMI 1016 - AT - Service Tax

Extended period of limitation - suppression of facts - intent to evade or not - differences between the Form-26AS and the Balance Sheet furnished by the appellant - HELD THAT - In the present case on the basis of third party data received from the Income Tax Department there was a mismatch in the gross amount declared in the ITR/TDS on the services during the period of FY 2016-17. Further due to portal glitches certain errors were there in the service tax returns for the second half year period from 01.10.2016 to 31.03.2017; but at the time of statutory audit the exact liability was indentified and entire amount was deposited. The information sought by the Revenue was supplied along with the relevant documents but despite that show cause notice was issued after inordinate delay of more than three years and by resorting to best judgment assessment the demand was confirmed without looking into the documents/information supplied by the appellant. Extended period of limitation - HELD THAT - There is no allegation of suppression against the appellant either in the show cause notice or in the Order-in-Original Order-in-Appeal. The Revenue has failed to establish any of the ingredients as required for invoking the extended period of limitation. The impugned order is barred by limitation - Appeal of the appellant allowed only on limitation by setting aside the impugned order.

Summary

The present appeal before the Appellate Tribunal, CESTAT Chandigarh, concerns the rejection of the appellant's appeal by the Commissioner (Appeals) and the confirmation of the Order-in-Original. The appellant, a clearing and forwarding agency registered with the service tax department, faced discrepancies in its service tax returns for the period of January and March 2017 due to technical glitches or data entry errors. Despite efforts to rectify the errors after they were discovered during a statutory audit, the Adjudicating Authority confirmed a demand based on these mistakes, leading to the appeal.**Issues Presented and Considered:**1. Whether the impugned order confirming the demand based on technical errors in service tax returns is sustainable in law.2. Whether the demand confirmed by the Adjudicating Authority is barred by limitation.3. Whether the Adjudicating Authority and Commissioner (Appeals) failed to consider all relevant documents and information submitted by the appellant.4. Whether the best judgment assessment under Section 72 of the Finance Act, 1994 was reasonable in this case.**Issue-wise Detailed Analysis:**- The appellant argued that the demand was unjust as all necessary documents were submitted in response to the show cause notice and during the personal hearing. They contended that the Adjudicating Authority and the Commissioner (Appeals) failed to consider these documents, leading to an incorrect confirmation of the demand.- The appellant also raised the issue of the demand being time-barred, citing that there was no allegation of suppression of material facts to invoke the extended period of limitation under Section 73(1) of the Finance Act, 1994.- The appellant referenced various legal precedents to support their arguments, emphasizing that even best judgment assessments must be made reasonably and not based on conjectures.**Significant Holdings:**- The Tribunal found that the demand confirmed by the Adjudicating Authority was barred by limitation as there was no allegation of suppression against the appellant and the Revenue failed to establish the necessary ingredients for invoking the extended period.- The Tribunal allowed the appeal of the appellant solely on the grounds of limitation, setting aside the impugned order.The Tribunal's decision highlights the importance of considering all relevant documents and information submitted by taxpayers in tax assessment proceedings and emphasizes the requirement for authorities to establish the grounds for invoking the extended period of limitation before confirming demands.