9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (3) TMI 576 - AT - Service TaxRecovery of service tax with interest and penalty - demand of service tax based on gross receipts as reflected in Form 26AS - to availability of deductions from the total turnover for the supply of goods which were assessed under VAT thereby reducing the taxable value for Service Tax - penalties - HELD THAT - Service Tax is not leviable on the transactions treated as sale of goods and subjected to levy of Sales Tax/VAT - the Appellant had produced VAT assessment order and have paid VAT. This evidence was produced before the Original Authority and after going through the same it is found that this can be considered as sufficient evidence. Moreover it is the responsibility of the Department to establish that the Appellant has rendered taxable services which obligations have also not been fulfilled in this case. It is also found that the Revenue has not made any enquiries with regard to supplies made by the Appellant and subsequent assessment in respect of the same by the VAT Department. The Revenue has only relied upon form 26AS of the Income Tax Department and has found it more authentic and reliable as compared to the assessment order passed by the VAT Department. This observation of the Revenue is not based on sustainable sound footing. The Tribunal from time to time have observed that demand of tax cannot be confirmed solely on the basis of 26AS without making any enquiry in this regard. The Hon ble Supreme Court in the case of Bharat Sanchar Nigam Limited vs. Union of India 2006 (3) TMI 1 - SUPREME COURT and also the Tribunal in the case of Idea Mobile Communication Ltd. vs. Commissioner of Central Excise Trivendram 2006 (5) TMI 17 - CESTAT BANGALORE have observed that transaction held that sale of goods under assessment order of the State Authorities will be treated as sales - Service Tax has been demanded only on the basis of Form 26AS statement of the Income Tax Department which is not sustainable. Penalties - HELD THAT - The penalties imposed were not justified. Conclusion - i) Service Tax demanded only on the basis of Form 26AS statement of the Income Tax Department which is not sustainable. ii) The Appellant was entitled to deductions for the supply of goods reducing the taxable value. iii) The penalties imposed were not justified. Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include: 1. Whether the Service Tax demand of Rs.30,95,414/- on the Appellant based on gross receipts as reflected in Form 26AS is justified. 2. Whether the Appellant is entitled to deductions from the total turnover for the supply of goods, which were assessed under VAT, thereby reducing the taxable value for Service Tax. 3. Whether the penalties imposed under various sections of the Finance Act, 1994, and the CGST Act, 2017, are justified given the circumstances of the case. ISSUE-WISE DETAILED ANALYSIS 1. Justification of Service Tax Demand: Relevant legal framework and precedents: The demand for Service Tax was made under the provisions of the Finance Act, 1994, read with the CGST Act, 2017, based on the gross receipts as per Form 26AS from the Income Tax Department. Court's interpretation and reasoning: The Tribunal noted that the Service Tax was demanded solely based on the Form 26AS, without considering the VAT assessment order and the nature of the transactions involved. Key evidence and findings: The Appellant provided evidence in the form of VAT returns and a VAT assessment order indicating that a significant portion of the receipts was for the supply of edible materials, which were not subject to Service Tax. Application of law to facts: The Tribunal found that the VAT assessment order should have been considered as sufficient evidence to exclude the value of the supply of goods from the taxable service value. Treatment of competing arguments: The Department argued that the Form 26AS was more reliable, but the Tribunal emphasized that the VAT assessment should not be disregarded without a proper inquiry. Conclusions: The Tribunal concluded that the Service Tax demand based solely on Form 26AS was not sustainable. 2. Entitlement to Deductions for Supply of Goods: Relevant legal framework and precedents: Transactions treated as sales of goods and subjected to VAT are not liable for Service Tax. Court's interpretation and reasoning: The Tribunal highlighted that the Appellant had provided sufficient evidence in the form of VAT assessments and Chartered Accountant certification to support their claim for deductions. Key evidence and findings: The VAT assessment order and the Chartered Accountant's certificate confirmed the supply of goods and the corresponding VAT payment. Application of law to facts: The Tribunal applied the principle that sales assessed by State Authorities should be treated as sales and not subject to Service Tax. Treatment of competing arguments: The Department's reliance on Form 26AS was deemed insufficient without further inquiry into the nature of the transactions. Conclusions: The Tribunal allowed the deductions claimed by the Appellant, reducing the taxable value for Service Tax. 3. Justification of Penalties: Relevant legal framework and precedents: Penalties were imposed under various sections of the Finance Act, 1994, and the CGST Act, 2017, for alleged failures in compliance. Court's interpretation and reasoning: Given the Tribunal's findings on the Service Tax demand, the basis for imposing penalties was undermined. Key evidence and findings: The Tribunal found the Appellant's evidence sufficient to challenge the penalties. Application of law to facts: The Tribunal determined that the penalties could not be justified when the primary tax demand was unsustainable. Treatment of competing arguments: The Tribunal did not find the Department's justification for penalties compelling in light of the evidence provided by the Appellant. Conclusions: The penalties imposed were not upheld. SIGNIFICANT HOLDINGS The Tribunal held that the Service Tax demand based solely on Form 26AS was unsustainable, emphasizing that: "Service Tax is not leviable on the transactions treated as sale of goods and subjected to levy of Sales Tax/VAT." The Tribunal established that: "The Revenue has only relied upon form 26AS of the Income Tax Department and has found it more authentic and reliable as compared to the assessment order passed by the VAT Department. I find that this observation of the Revenue is not based on sustainable sound footing." Final determinations on each issue were as follows: 1. The Service Tax demand was set aside. 2. The Appellant was entitled to deductions for the supply of goods, reducing the taxable value. 3. The penalties imposed were not justified and thus overturned. The appeal filed by the Appellant was allowed with consequential relief as per law.
|
