2024 (1) TMI 1161 - AT - Service Tax

Chartered Accountant's certificate alone constitutes valid evidence without corroboration in service tax differential demand case

Principal Commissioner CGST & Central Excise, Mumbai East Versus M/s. SBI Life Insurance Company Ltd.

The CESTAT Mumbai dismissed the appeal in a service tax case involving duty demand based on differential figures between Service Tax-3 Returns and Income ... Duty demand on the basis of differential figures available in Service Tax-3 Returns and Income Tax Returns for the period between October 2013 and March 2014 - reliance mainly on the certificate issued by the Chartered Accountant - HELD THAT:- At the outset it is to be noted that certificate issued by the Chartered Accountant is alone a valid piece of evidence without corroboration in view of several decisions of this Tribunal in the case of Rajashree Polyfil Vs. Commissioner of Central Excise & Service Tax, Surat-II [2023 (6) TMI 456 - CESTAT AHMEDABAD]. It can be treated as expert’s evidence for the reason that Institute of Chartered Accountants of India, a statutory body instituted by the Government of India has recognized them to be competent to issue certificates on Financial Statements and Auditor General of India has been accepting the Financial Statement of registered Companies, when endorsed by Chartered Accountants with their signatures and seals, apart from the fact that Section 32(2) of the Indian Evidence Act, 1872 permits acceptance of such document without a formal proof, in their absence under certain contingences. In view of irregularity in the Show cause and the non-sustainability of demand purely on the basis of difference between ST- 3 return and Income Tax returns of any other period, without any further examination to establish that the difference is on account of consideration received towards discharge of services, the order passed by the Commissioner is hereby confirmed. Appeal dismissed. Issues Involved:The judgment involves duty demand, interest, and penalties under various sections of the Finance Act, 1994 based on differential figures in Service Tax-3 Returns and Income Tax Returns for a specific period. The primary issue revolves around the legality of the order passed by the Commissioner of CGST & Central Excise, Mumbai absolving the respondent of its liabilities, which is being challenged by the Revenue-Department before the Appellate Tribunal.Facts and Arguments:The case pertains to a company engaged in providing insurance services and other activities. The Revenue-Department observed a shortfall in Service Tax payment by the company based on a comparison of turnover figures from Income Tax and Service Tax Returns. A demand notice was issued, leading to adjudication where the Commissioner absolved the company of its liabilities. The Revenue-Department contested this decision, citing reliance on a Chartered Accountant certificate without sufficient verification as a key ground.Legal Analysis:The appeal involved arguments regarding the validity of the Chartered Accountant certificate as evidence and the sufficiency of the basis for the demand raised. The Tribunal examined the certificate's validity, highlighting the statutory recognition of Chartered Accountants to issue such certificates. It noted discrepancies in the demand calculation, including incorrect turnover figures and tax rates applied. The Tribunal emphasized the need for proper examination to establish the basis of the demand, as per relevant legal provisions.Judgment and Conclusion:After detailed analysis, the Tribunal upheld the Commissioner's order, dismissing the appeal and confirming the decision to set aside the demand raised against the respondent. The Tribunal emphasized the flaws in the show cause notice and the lack of sustainability in the demand solely based on differences between ST-3 and Income Tax returns without proper verification. The judgment highlighted the necessity to establish the value for service tax calculation and the insufficiency of the initial show cause notice. The order was pronounced in open court on a specific date.This summary provides a comprehensive overview of the legal judgment, outlining the issues involved, facts of the case, arguments presented, legal analysis conducted, and the final judgment delivered by the Appellate Tribunal CESTAT MUMBAI.