Service tax demand on composite income difference fails without identifying taxable service components and exact taxable value.

Service tax liability cannot be sustained on a mere composite difference between financial records and ST-3 returns without first identifying the specific taxable services and the taxable value attributable to each receipt. In a freight forwarding and allied cargo handling dispute, the adjudication failed to establish the nature of each income component or to obtain a proper breakup, so it could not determine whether any part was non-taxable, exempt, or reimbursable. The demand was therefore not maintainable in its existing form and the matter required fresh redetermination on the basis of proper details.

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Issues: Whether the demand of service tax could be sustained on the entire differential income shown in the assessee's financial records without first identifying the exact taxable services and the breakup of receipts, and whether the matter required remand for redetermination of the taxable value.

Analysis: The receipts in dispute arose from freight forwarding and allied cargo handling activities, but the adjudication proceeded on the premise that the entire difference between the balance sheet figures and the ST-3 returns represented taxable income. The recorded reasoning shows that the nature of each component of income was not established and no adequate breakup was furnished despite requisition. At the same time, the taxability of service receipts cannot be determined merely from accounting entries, and only the portion attributable to taxable services can be brought to tax. The absence of a proper breakup prevented a conclusive determination on the exact taxable component, including whether any part of the income was non-taxable, exempt, or in the nature of reimbursable expenses.

Conclusion: The demand as confirmed in the impugned order could not be sustained in its existing form, and the matter was required to be sent back for fresh determination of the taxable value on the basis of proper details to be furnished by the assessee.

Ratio Decidendi: Service tax liability cannot be fixed on a composite difference in financial statements and returns without identifying the specific taxable service component and the taxable value attributable to it.

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