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of <h1>Court Overturns Order; Service Tax Demand Based on Form-26AS Invalid Due to Procedural Flaws and Limitations Misuse</h1> <h3>M/s. Piyush Sharma Versus Commissioner of CGST & CX, Patna-I</h3> M/s. Piyush Sharma Versus Commissioner of CGST & CX, Patna-I - TMI Issues involved:The judgment involves the following Issues:1. Demand of service tax for the period 2012-13 to 2016-17 based on show cause notice.2. Applicability of Valuation Rules, 2006 and Notification No.30/2012-ST dated 20.06.2012.3. Bar of limitation for the demand raised.4. Validity of the demand calculated on the basis of Form-26AS.Issue 1: Demand of service tax for the period 2012-13 to 2016-17 based on show cause notice:The appellant contested the show cause notice demanding service tax for the mentioned period, which was confirmed against the appellant. The appellant argued that the demand cannot be raised solely based on Form-26AS figures, as they received contractual payments for executing 'Works Contract Services' and had submitted relevant documents. The demand was calculated using the Best Judgement Method for the period April 2017 to June 2017, which the appellant disputed. The appellant also raised concerns about the violation of natural justice principles and the arbitrary nature of the demand.Issue 2: Applicability of Valuation Rules, 2006 and Notification No.30/2012-ST dated 20.06.2012:The appellant claimed eligibility for the benefit of Notification No.30/2012-ST dated 20.06.2012, as a Proprietorship Firm, and argued that the valuation should have been done in accordance with Rule 2A(ii) of the Valuation Rules, 2006 after allowing abatement. The appellant contended that the tax liability was not calculated based on relevant Rules and Notifications, and a mandatory preshow cause notice consultation was not conducted. The appellant presented a detailed computation to show a vast difference in the calculated liability compared to the hypothetical amount demanded.Issue 3: Bar of limitation for the demand raised:The appellant raised the issue of the demand being barred by limitation, as the show cause notice for the period 2012-13 to 2016-17 was issued beyond the normal period of limitation. The appellant argued that they had been submitting returns and paying service tax, making the differential demand hypothetically demanded and contrary to statutory provisions.Issue 4: Validity of the demand calculated on the basis of Form-26AS:The appellant challenged the validity of the demand calculated based on Form-26AS figures obtained from the Income Tax Department. The appellant highlighted that being a registered service provider and regularly filing Service Tax returns, the demand solely based on Form-26AS without conducting any investigation or providing an opportunity for the appellant to participate in the proceedings was unjustified. The judgment held that no sustainable demand could be raised against the appellant solely on the basis of Form-26AS.Therefore, the judgment set aside the impugned order and allowed the appeal in favor of the appellant, emphasizing that the extended period of limitation was not applicable, and the demand based on Form-26AS was unsustainable.
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