9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (7) TMI 770 - AT - Service TaxShort declaration of taxable value in the service tax return (as compared to the service related taxable value declared by them in their Income Tax Return (ITR)/ Form 26AS) - appellant claims the difference either to be reverse charge or negative listed and exempt - confirmation of service tax demand against appellant based on data shared by the CBDT - extended period of limitation - suppression of facts or not. Whether Appellant is liable to pay service tax on such differential value? HELD THAT - In the present matter when the Service tax is demanded on Income declared before the income tax authorities, it is the responsibility of the department to show that the said income are proceeds of the taxable services and appellant had rendered these services to customers with positive evidences. In the present case department failed to do so. Further on going through the impugned show cause notice, it is found that the show cause notice does not analyze any taxable activities carried out by the Appellant and whether the same would fall within the definition of any taxable service. It is settled principle of law that unless and until the clear analysis of the activity done by the assessee is carried out and classification of service is ascertained, demand of service tax only on the basis of data provided by the CBDT cannot be confirmed. It is found that the Income tax return and Form 26AS is not a statutory documents for determining the taxable turnover under the Service Tax provisions. The said documents are at the most relevant for Income Tax purpose only. Whereas under the Service Tax provisions, the service tax is chargeable on the taxable service provided. Thus, we find that the whole basis of show cause notice is incorrect - it is not found that the demand confirmed on the basis of Income Tax data to be sustainable. It is also found that absolutely no proper inquiry has been made by the department with the Appellant as regard the disputed difference. No statement in this regard asking them about the income declared to the income tax authorities has been recorded. No evidence was produced by the department to show that the amounts declared by the appellant before the income tax authorities are pertaining to the taxable services. In absence of any such evidence, it cannot be said that the income declared by them to the income tax authorities is attributable to the taxable services provided by them to their clients during the disputed period - in the case of COMMISSIONER OF C. EX., LUDHIANA VERSUS RAMESH STUDIO COLOR LAB 2010 (5) TMI 466 - CESTAT, NEW DELHI where similar service tax demand had been made against the respondent in similar circumstances, the Tribunal has upheld the Appellate order setting aside the service tax demand and penalty against the respondent. Similarly in the case of KIPPS EDUCATION CENTRE VERSUS CCE, LUDHIANA 2008 (3) TMI 269 - CESTAT NEW DELHI , it was held by the Tribunal that income voluntarily disclosed before the income tax authorities could not be added to the taxable value unless there is evidence to prove the same. In this case also, there is no evidence to show that the income disclosed is the part of taxable service. Thus, the demand of services tax is not sustainable on the basis of CBDT data or data provided by the Income tax department. It is found that the adjudicating authority in his order assumed that it is not clear that whether the service recipients are individuals or body corporate for this reason he confirmed demand on the entire value. In this regard it is found that the appellant in their additional submission given the details of service recipient of GTA, wherein all the service recipient are body corporate, dealer of excisable goods, registered factory, a partnership firm which are covered under exemption notification, whereby the service recipient is liable to pay service tax. Therefore, the assumption of the adjudicating authority is absolutely incorrect without any basis. Extended period of limitation - Suppression of facts or not - HELD THAT - Department has invoked the extended period alleging suppression of facts, for the reason that the exempt/non-taxable services were not disclosed in the service tax returns. It is observed that the appellant obtained service tax registration in the year 2005 and the department had conducted various audit from the year 2005 up to June 2017 and it had never objected to the Appellant with respect to the practice of not reporting the exempted or non-taxable turnover in the Service tax returns, or never intimated the Appellant that this practice could be considered as suppression of facts. Therefore, neither there was intent to evade payment of Service tax, nor to suppress any facts from the revenue, and hence, the adjudicating authority grossly erred while invoking extended period of limitation, and hence, the entire proceeding is liable to be quashed on the ground of time bar also. Thus, the show cause notice was admittedly issued only for the period 2015-16, whereas the demand in the Order in-original was confirmed for 2015-16, 2016-17 and 2017-18 (up to June 2017) which is a serious error on the part of the adjudicating authority - it is found that when no demand was raised in show cause notice as no quantification was made, the demand cannot be confirmed in the adjudication order without quantifying the demand in the show cause notice, for this reason also the demand for the period which was neither quantified nor raised in the show cause notice is ab-initio, void and illegal and the same is not sustainable on this ground alone. Appeal allowed.
Issues Involved:
1. Whether the appellant is liable to pay service tax on the differential value based on the data shared by CBDT. 2. Whether the extended period for demand is justified. 3. Whether the demand can be confirmed based on Income Tax data without corroborative evidence. 4. Whether the demand is sustainable when the show cause notice did not quantify the demand for certain periods. Summary: Issue 1: Liability to Pay Service Tax on Differential Value The core issue was whether the appellant is liable to pay service tax on the differential value between the income declared in their Income Tax Returns (ITR)/Form 26AS and the taxable value declared in their service tax returns. The tribunal found that the department failed to provide positive evidence that the income declared to the Income Tax authorities was attributable to taxable services. The show cause notice did not analyze the taxable activities or classify the services, which is essential for confirming service tax demand. The tribunal emphasized that service tax cannot be demanded solely based on data from CBDT without examining the reasons for the difference and establishing that the income was from taxable services. Issue 2: Extended Period for Demand The tribunal found that the extended period for demand was wrongly invoked. The department alleged suppression of facts because the appellant did not disclose exempt/non-taxable services in their service tax returns. However, the tribunal noted that the appellant had been following the same practice since 2005, and the department had conducted audits without objecting to this practice. Therefore, there was no intent to evade tax or suppress facts, making the invocation of the extended period unjustified. Issue 3: Demand Based on Income Tax Data The tribunal held that income tax data alone cannot be the basis for demanding service tax. It cited several judgments supporting the view that amounts shown in income tax returns or Form 26AS are not liable for service tax unless corroborated by evidence that these amounts are for taxable services. The tribunal found that the department did not conduct proper inquiries or provide evidence that the income declared was for taxable services. Therefore, the demand based on income tax data was not sustainable. Issue 4: Demand for Periods Not Quantified in Show Cause Notice The tribunal noted a serious error in the adjudication order, which confirmed the demand for periods not quantified in the show cause notice. The demand was confirmed for 2015-16, 2016-17, and 2017-18 (up to June 2017), but the show cause notice was issued only for 2015-16. The tribunal held that demands cannot be confirmed without quantification in the show cause notice, rendering the demand for unquantified periods void and illegal. Conclusion: The tribunal set aside the demand of service tax, interest, and penalty, finding them unsustainable based on the above issues. The appeal was allowed with consequential relief as per law.
|
