Service tax demand needs independent proof of taxable services; balance-sheet and return mismatch alone is not enough.

Service tax demand cannot be sustained merely because balance-sheet figures exceed ST-3 return figures; the revenue must produce independent material showing that the difference represents taxable services. A mismatch in accounting figures, without proof of actual provision of taxable services or suppression of turnover, is insufficient to justify demand. The burden to establish non-payment rests on the revenue, and where that burden is not discharged the demand fails. On the stated facts, the excess income was attributed to the accounting method of revenue recognition, so the demand was held not sustainable and consequential relief followed.

---

---

Issues: Whether service tax demand could be sustained merely on comparison of balance-sheet figures with ST-3 return figures, in the absence of independent evidence that the excess amount represented taxable services.

Analysis: The revenue's case rested only on a discrepancy between the figures shown in the financial records and those declared in the returns. The explanation that the difference arose from the accounting method adopted for revenue recognition was accepted in principle by the lower authorities, yet the demand was still confirmed. The Tribunal held that a demand cannot be upheld solely on such comparison unless there is evidence showing that the higher balance-sheet income actually reflects provision of taxable services. The burden to establish suppression or non-payment rested on the revenue, and that burden was not discharged.

Conclusion: The demand was not sustainable and the issue was decided in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: A service tax demand cannot be confirmed merely from a mismatch between balance-sheet figures and return figures unless the revenue proves, with independent material, that the excess amount represents taxable services.

---