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TMI Blog2022 (4) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity without any evidence was not sustainable in the absence of cogent, convincing and tangible evidences. Income tax and service tax are two different/ separate and independent special Act and their provisions operating in two different fields. Therefore by relying the income disclosed in income tax provision, without undertaking any independent investigation under the Service Tax Act, demand of service tax cannot be made. In the case of M/S. RAVI FOODS PVT. LTD. OTHERS VERSUS CCE, HYDERABAD [ 2010 (12) TMI 290 - CESTAT, BANGALORE] , it was held that admission by assessee to Income Tax department as regards undisclosed/suppressed sales turnover cannot be held to be on account of clandestine removal of their final products, in the absence of any other corroborative evidence. The meaning of income has been defined under Section 2(24) of the Income tax Act, 1961 is very wide and it cover all types of Income. Income can also be earned from taxable, non-taxable, exempted activity. The provisions of Income-tax Act and IDS scheme are having specific scope, purpose and intent, as decided by the legislature. Further, under the Income tax, income declared by the assessee cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 wherein the gross receipts/ revenue was worked out and estimated as ₹ 86,87,78,400/- The said investigation was culminated into show cause notice where the amount of ₹ 32,50,10,000/-considered as profit and gross receipts worked out at ₹ 86,87,78,400/- in respect of the said profit. Demand of service tax of ₹ 3,90,95,028/- along with interest under Section 75 and penalty under Section 77 and 78 of the Finance Act, 1994 was proposed on gross receipt considered as taxable value towards rendering taxable service.The said notice was adjudicated by the Principal Commissioner, Ahmedabad vide impugned order. He confirmed the impugned demand along with interest and penalty and in addition, Penalty of ₹ 1 Lakh was also imposed on Shri Mukesh R Agarwal, Director of Appellant Company. Aggrieved by the impugned order the present Appeals have been filed. 02. Shri Hardik Modh, Learned Counsel appearing on behalf of the appellant submits that Shri Girish Patel retracted his statement vide affidavit dated 06.10.2020 wherein he clarified that he was forced to mention that the said cash amount was generated out of construction activity. Even Shri Mukesh Agarwal, Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the income declared by the Appellant under the IDS scheme does not mean that the Appellant earned the amount from taxable service which is chargeable to service tax in terms of Finance Act, 1994. The revenue failed to appreciate the definition of Service provides under Section 65B(45) of the Act. 2.2 He also submits that merely amount shown in the financial statements without adducing any evidence, cannot be considered as taxable service. He placed reliance on the following decisions:- M/s MPA Marketing Pvt. Ltd. Vs. Commissioner of Central Excise 2020(1) TMI 370, Go Bindas Entertainment Pvt. Ltd. Vs. CST -2019 (27) G.S.T.L. 397 (Tri.), Vijay Packaging Systems Ltd. Vs CCE 2018 (262) ELT 832, Beekaylon Synthetics Vs CCE 2003 (158) ELT 307. 2.3 He further argued that respondent erred in relying the letter dated 22.10.2019 issued by the Deputy Director (Cost) for computing gross receipts considering gross profit ratio of past 5 financial years. Burden lies upon Revenue to show that particular amount was generated out of taxable service. The respondent ought not to have computed gross receipts based on Gross Profit Ratio . 2.4 He also argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um-tax -value, for which he relies upon the decision of Sri Chakra Tyres Vs CCE (Madras) 1999 (108) ELT 361, Rohit Detective Security Agency Vs CCE 2009 (14) STR 689 (T) Gem Star Enterprises Pvt Ltd. Vs CCE 2007 (7) STR 342. 03. On other hand Shri T.G. Rathod, the learned Departmental Representative, defended the impugned order by reiterating the finding of Commissioner. He submits that the circular relied upon by the Appellant itself clearly indicate that Preventive and Offence related to SCN have been kept out of purview of pre-show cause notice consultation. The Circular No. 25/2016 dated 30.06.2016 and 27/2016 dated 14.07.2016 issued by the CBDT clarified that declared income will not be shared with any other law enforcement agency. The said circulars issued with regards to IDS and all that circular says it that the Income tax department will not share the details to declaration with any other law enforcement agency. This merely restricted the Income tax department to share the details but in no way restricts other law making agencies to conduct inquires in respect of the information gathered by them on their own records. It is fact on records that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent did not produce any evidence on record to prove that the disclosed Income under Income Tax Disclosure Scheme, 2016 pertained to construction activity and that the charges of income was generated out of taxable activity without any evidence was not sustainable in the absence of cogent, convincing and tangible evidences. Income tax and service tax are two different/ separate and independent special Act and their provisions operating in two different fields. Therefore by relying the income disclosed in income tax provision, without undertaking any independent investigation under the Service Tax Act, demand of service tax cannot be made. 4.3 We observed that the Hon‟ble Madras High Court in the matter of Commr. Of Income tax, Trichy vs. Amman Steel Allied Industries 2015(330) ELT 130 (Mad.) held that 12. This Court is of the considered view that the finding of the CIT (Appeals) as well as the Tribunal that merely on the basis of the show cause notice issued by the Central Excise Department, determination of tax under the Income-tax Act cannot be made, as it is not incumbent on the income-tax authorities to take into consideration only the materials made available by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations. Vide Shanti Prasad Jain v. Director of Enforcement [1963] 33 Comp Cas 231; [1963] 2 SCR 297. The proceedings under the Foreign Exchange Regulation Act are quasi-criminal in character. It is pellucid that the ambit, scope and intendment of these two Acts are entirely different and dissimilar. The above decision of the Supreme Court is squarely applicable to the facts of the present case and, therefore, we have no hesitation to hold that the method adopted by the CIT (Appeals) with regard to taxation under the Income-tax Act, as affirmed by the Tribunal, is the correct method of determining the income based on the unaccounted turnover. 4.4 We also find that the said issue has been considered by the Tribunal in various decisions. In the case of M/s. Commissioner of Central Excise, Ludhiana Vs Mayfair Resorts 2011 (21) S.T.R. 589 (Tri. - Del.) (supra), the Tribunal had held as under:- 4. Heard both sides and have gone through the evidence on record. From reply given to the Income Tax authority on 21-3-05 by the respondent, the matter is clear to be related to the financial year ending 31-3-05. The balance sheet no where discloses that the amount of ₹ 35 lak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Income Tax Department during the survey on 6-1-2006. It was explained that whenever surrender of amount was made under the Income-tax Act, it is added to the income in the assessment year 2005-06 (relevant to the previous year) for the purpose of charging income-tax. The amount surrendered represents the established accumulated effect of undisclosed incomes for the earlier financial years since 1999-2000. The Original Authority observed that the respondents failed to produce any evidence regarding income of the said amount shown to the Income Tax Department that income was from other sources. In this context, the findings of the Commissioner (Appeals) are reproduced below :- 8. The main issue in these appeals is whether the income surrendered by the appellants to the income-tax department can be taken as the value of taxable service for charging service tax. It is observed that the Hon ble CESTAT in the final Order No. 1147-2008-SM (BR) dated 28-3-2008 passed in the case of Kipps Education Centre, Bhatinda v. CCE, Chandigarh has held that income voluntarily disclosed before the income-tax authorities which was suppressed by the party could not be added to the taxable va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose, the details of which have been submitted to the lower authorities. The Revenue also could not point out excess receipt on these contracts or the taxable service which gave them the consideration escaping the tax.In the absence of specific allegation with reference to the nature of service or the service recipient it is not tenable to hold an income of the appellant even if it is admitted to be an actual income, as consideration for a taxable service. The minimum requirement to tax an assessee for service tax is to identify the nature of their taxable service along with the recipient of such service. In the present case all identified contracts for the identified service recipients have been examined and concluded by the lower authority. No service tax liability can be fastened on unidentified service for unidentified service recipient. There is no provision for such summary assumption even under Section 72 of the Finance Act, 1994. Admittedly, the said section provides for arriving at the taxable value to be based on the Assessing Officer s best judgment in case where the appellant fails to furnish return under Section 70 or fails to assess the tax in accordance with Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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