Uncorroborated third-party balance sheets cannot sustain service tax demand without independent evidence of suppression.

Service tax demand could not be sustained solely on balance sheets recovered from an associated concern when no corroborative evidence was recovered from the assessee itself. The assessee's explanation that the documents were prepared for tender participation was supported by record, including the statement of the Chief General Manager, while the Department produced no independent material to link them with actual suppression of taxable value. In a fiscal matter involving serious allegations, the burden remained on the Department to prove short levy, and private documents by themselves were insufficient to uphold the demand; the levy was therefore set aside.

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Issues: Whether service tax demand could be sustained solely on the basis of balance sheets recovered from a third party without corroborative evidence from the assessee.

Analysis: The demand was founded on balance sheets recovered during search from an associated concern, while no documentary evidence was recovered from the assessee's own . The assessee consistently explained that the balance sheets were prepared for tender participation, and that explanation was supported by material on record, including the statement of the Chief General Manager. The Department did not produce independent corroboration linking those documents to actual suppression of taxable value. In a fiscal matter involving a serious allegation, the burden remained on the Department to establish the short levy, and private documents by themselves, without supporting evidence, were insufficient to uphold the demand.

Conclusion: The demand of service tax was not sustainable on the uncorroborated third-party balance sheets, and the order confirming the levy was set aside in favour of the assessee.

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