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2025 (2) TMI 1059 - AT - Service TaxValidity of demand for service tax based solely on the data from Form 26AS - exemption to services provided by the appellant to local government bodies - applicability of Entry No. 12A of N/N. 25/2012-ST - invocation of Extended period of Limitation. HELD THAT - The entire show cause notice is based on the data received from Income Tax Department in Form 26AS. Revenue has not examined the data received by them to know whether any service was rendered by the appellant which attracted service tax. When the exemptions were claimed by the appellant before the original authority he has simply ignored the submissions and confirmed the entire demand as raised in the show cause notice. Therefore both show cause notices and order-in-original put together have solely relied on the information received in Form 26AS which is the amount received by the appellant. The issue is no more res integra and it has been decided that only on the basis of data in Form 26AS Revenue cannot issue show cause notice demanding service tax. Here it is noted that charging Section 66B of Finance Act 1994 provides for levy of service tax at a specific percentage on the value of service. Section 67 of Finance Act 1994 provides that where service tax is chargeable on a taxable service with reference to its value then such value shall be the consideration in money charged by the service provider - it is clear that while determining value of taxable service under Section 67 ibid such aspect as to the activities which are covered by negative list and which are mentioned in the definition of service as those which are not covered by such definition become important. Conclusion - The demand cannot be raised merely on the basis of the data received from the Income Tax Department without any corroborating evidence to substantiate that the value received were in connection with taxable service rendered by the Appellant. The impugned order set aside - appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Legality of Demand Based on Form 26AS Data Relevant legal framework and precedents: The demand was raised under sub-section (1) of Section 73 of the Finance Act, 1994, which allows for recovery of service tax not levied or paid. The Tribunal referenced several precedents, including Umesh Tilak Yadav and Maa Kalika Transport Pvt. Ltd., which established that demands cannot be based solely on Form 26AS data without corroborating evidence. Court's interpretation and reasoning: The Tribunal found that the show cause notice and the order-in-original relied exclusively on Form 26AS data without verifying whether the amounts received were for taxable services. The Tribunal emphasized that the Revenue must establish that the consideration received corresponds to taxable services under Section 65B(44) of the Finance Act, 1994. Key evidence and findings: The Tribunal noted the absence of any examination of the appellant's records to determine the nature of the services provided. Application of law to facts: The Tribunal concluded that the demand based solely on Form 26AS data, without evidence of taxable services, is not sustainable. Treatment of competing arguments: The appellant argued that the demand was unsustainable without examining their records, while the Revenue supported the order-in-original. The Tribunal sided with the appellant, citing established precedents. Conclusions: The Tribunal held that the demand based on Form 26AS data alone is not legally sustainable. 2. Exemption under Entry No. 12A of Notification No. 25/2012-ST Relevant legal framework and precedents: Entry No. 12A of Notification No. 25/2012-ST exempts services provided to local government bodies from service tax. Court's interpretation and reasoning: The Tribunal recognized that services provided to municipalities, such as street lighting, fall under the functions entrusted to municipalities by Article 243W of the Constitution of India and are exempt from service tax. Key evidence and findings: The appellant provided evidence of work orders and VAT payments for goods sold to municipalities, supporting their claim for exemption. Application of law to facts: The Tribunal agreed that the services provided were exempt under the notification, as they were rendered to local government bodies. Treatment of competing arguments: The appellant's argument for exemption was accepted, as the Revenue did not provide contrary evidence. Conclusions: The Tribunal concluded that the services provided by the appellant are exempt from service tax under the specified notification. 3. Invocation of Extended Period of Limitation Relevant legal framework and precedents: The extended period of limitation under Section 73 of the Finance Act, 1994, can be invoked in cases of suppression, willful misstatement, or fraud. Court's interpretation and reasoning: The Tribunal did not find any evidence of suppression or willful misstatement by the appellant that would justify the invocation of the extended period. Key evidence and findings: The Tribunal noted the lack of evidence indicating any intent to evade tax on the part of the appellant. Application of law to facts: The Tribunal determined that the conditions for invoking the extended period were not met. Treatment of competing arguments: The Revenue's reliance on the extended period was not supported by evidence of suppression or intent to evade tax. Conclusions: The Tribunal held that the invocation of the extended period of limitation was unjustified. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: The Tribunal stated, "The demand cannot be raised merely on the basis of the data received from the Income Tax Department, without any corroborating evidence to substantiate that the value received were in connection with taxable service rendered by the Appellant." Core principles established: The judgment reinforces that demands for service tax must be based on evidence of taxable services and cannot rely solely on income data from Form 26AS. It also affirms the exemption for services provided to local government bodies under Notification No. 25/2012-ST. Final determinations on each issue: The Tribunal set aside the order-in-original, allowing the appeal and concluding that the demand for service tax was not sustainable based on the evidence presented. The services provided by the appellant were exempt, and the extended period of limitation was not applicable.
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