2019 (3) TMI 36 - AT - Service Tax

Evasion of service tax - Sale of Space and Time for Advertisement - Advertising Agency Services - scrutiny of their profit and loss account revealed that they have received more consideration from their client which was not reflected in their Service Tax Return during the relevant period - Held that - The entire case of the Revenue is based upon the comparison of figures as reflected in Profit and loss Account and Service Tax Returns. There is no further evidence to show that the appellant had provided the services in question. In the absence of any evidence reflecting upon the fact that the appellant have provided services and have received consideration that the same which was not included in STR returns, the demand raised on that basis is unsustainable as per the settled law. The allegations are being made by the Revenue and onus to prove the same is also on the Revenue - in the instant case there is no investigation to show as to whom the said services have been provided; that when the same were provided, who paid the consideration for the same and when the invoice was raised. In the absence of any such evidence, the demands are unsustainable. The Hon ble Madras High Court decision in the case of M/s Firm Foundations & Housing Pvt. Ltd. V/s Principal Commissioner, Chennai, 2018 (4) TMI 613 - MADRAS HIGH COURT , has dealt with an identical issue and held that Revenue s reliance on profit & loss account to include with amount reflected their in having been offered for service tax are irrelevant for the purpose of determination of tax and is based upon the impugned assessment which are erroneous. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Demand of duty based on discrepancies between profit and loss account and Service Tax Returns.
2. Allegations of providing services without evidence.
3. Applicability of tax laws on sale of space for advertisement.
4. Legal precedent regarding reliance on profit and loss account for tax determination.

Analysis:
1. The case involved a demand of duty amounting to approximately &8377;1.67 crores for the period 2013-14 due to discrepancies between the appellant's profit and loss account and Service Tax Returns. The Adjudicating Authority confirmed the demand, along with interest and penalty, based on the presumption that the consideration received by the appellant was for services provided under 'Advertising Agency Services'. However, the appellant contended that the considerations were for the sale of space, not taxable during the relevant period, and that they had discharged their VAT liability for the same.

2. The Tribunal noted that the Revenue's case relied solely on the comparison of figures in the profit and loss account and Service Tax Returns without substantial evidence proving that the appellant provided the services in question. The appellant maintained that the considerations were for the sale of space, and there was no evidence to establish otherwise. The Tribunal emphasized that the burden of proof lies with the Revenue, and in the absence of evidence demonstrating the provision of services, receipt of consideration, and invoicing details, the demand was deemed unsustainable.

3. Citing a decision by the Hon'ble Madras High Court in a similar case, the Tribunal emphasized that reliance on profit and loss account figures for tax determination, without concrete evidence of services provided, was erroneous. The legal precedent highlighted that the Revenue's reliance on profit and loss account entries for service tax inclusion was irrelevant and unsustainable. Following this reasoning, the Tribunal found no justifiable reasons to uphold the impugned orders and set them aside, allowing the appeal with consequential relief.

This comprehensive analysis of the judgment addresses the issues of demand based on discrepancies, lack of evidence for service provision, the tax treatment of sale of space for advertisement, and the legal precedent regarding the reliance on profit and loss accounts for tax determination.