2019 (2) TMI 2088 - AT - Service Tax

Tribunal overturns service tax liability order against appellant for services provided to banks like HDFC, ICICI, and Kotak Mahindra Bank.

The Tribunal set aside the order confirming service tax liability against the appellant for services provided to banks like HDFC, ICICI, and Kotak ... Demand of service tax alongwith interest and penalty - providing certain services to various banks such as HDFC, ICICI, Kotak Mahindra Bank etc. and was registered for payment of service tax for the period from 01.04.2010 to 10.07.2014 - HELD THAT:- The appellant was paying service tax and was filing ST-3 returns. Further, the differential service tax was demanded on the basis of information received from third party without examining whether the payments made by the third party to the appellant was in respect of taxable service provided by the appellant. In the absence of such information that the demanded service tax was lawfully payable by the appellant, such demand is not sustainable. The impugned order is set aside - appeal allowed. Issues:1. Service tax liability on appellant for services provided to banks.2. Demand of service tax based on information from third party.3. Sustainability of demand without verifying payments made for taxable services.Analysis:1. The case involved the confirmation of service tax against the appellant for providing services to various banks like HDFC, ICICI, and Kotak Mahindra Bank. The appellant was registered for service tax payment for the period from 01.04.2010 to 10.07.2014 and had filed ST-3 returns. The issue arose when a show cause notice was issued demanding a higher amount of service tax than confirmed by the Original Authority. The Commissioner (Appeals) did not interfere with the order except for offering a reduced penalty.2. The show cause notice dated 20.10.2015 highlighted that the appellant was paying service tax and filing returns regularly. However, the demand for differential service tax was made based on information received from a bank without verifying if the payments made to the appellant were for taxable services provided. The Tribunal noted that without establishing the lawfulness of the demanded service tax, such a demand is not sustainable. The lack of examination into the nature of payments by the third party rendered the demand questionable.3. The Tribunal, after considering the facts and arguments presented, set aside the impugned order and allowed the appeal. The judgment emphasized the importance of verifying the legality of demanded service tax before confirming such liabilities. The decision highlighted the necessity of ensuring that the tax demands are based on valid and lawful grounds, especially when relying on information from third parties.