Tax liability cannot rest on invoice descriptions alone; demand failed for want of proper enquiry into the actual activity.

Tax demand based on the assumption that an Attibele unit carried out manufacture or job work, and that invoice descriptions established taxable service, was held unsustainable. The record showed only competing assertions, while the assessee maintained that goods received from the job worker were semi-finished and underwent further manufacture at the Hosur unit. The adjudicating authority relied mainly on invoice wording without proper investigation into the actual nature of the activity. A finding affecting tax liability cannot rest on assumptions or presumptions and must be supported by enquiry into the true facts; on that basis, the demand was set aside as incorrect.

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Issues: Whether the demand confirmed on the footing that the appellant's Attibele unit carried out manufacture/job work and that the invoices reflected taxable service, was sustainable.

Analysis: The demand rested on the assumption that the Attibele unit was manufacturing goods and that the activity was exempt as service. The record, however, showed only allegations and counter-allegations, while the appellant maintained that the goods received from the job worker were semi-finished and were subjected to further manufacture at the Hosur unit. The adjudicating authority relied principally on invoice descriptions without any further investigation to establish the true nature of the activity. A finding affecting tax liability cannot rest on assumptions or presumptions and must be supported by proper enquiry into the actual facts.

Conclusion: The demand was held to be incorrect and unsustainable and the assessee succeeded on the issue.

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