2024 (2) TMI 566 - AT - Service Tax

Service tax demand based solely on Form 26AS cannot be sustained without proper investigation

M/s Rishu Enterprise Versus Commissioner of CGST & Excise, Dibrugarh

CESTAT Kolkata allowed the appeal against service tax demand based on Form 26AS from Income Tax Department. The Tribunal held that demand cannot be ... Service tax demand on the basis of Form 26AS issued by the Income Tax Department - invocation of extended period of limitation - HELD THAT:- The said issue has also been examined by this Tribunal in the case of M/S. PIYUSH SHARMA VERSUS COMMISSIONER OF CGST & CX, PATNA-I [2023 (10) TMI 736 - CESTAT KOLKATA], wherein this Tribunal has held on the basis of Form-26AS, no demand is sustainable against the appellant - thus merely on the basis of Form 26AS issued by the Income Tax Department, the demand of Service Tax is not sustainable against the appellant. Time Limitation - HELD THAT:- Initially, the investigation started against the appellant in April, 2015 when they came to know that the appellant is not paying service tax on taxable services and no efforts were made by the Department to issue the show-cause notice in time or to further investigate the matter, no efforts were made by the Department to find out for what purposes these amounts have been paid by the service recipient - as the investigation is faulty and the show-cause notice has been issued by invoking extended period of limitation, the demand is not sustainable on limitation itself. The impugned demand is not sustainable against the appellant on the basis of the details provided by the Income Tax Department in Form 26AS and the extended period of limitation is not invokable - Appeal allowed. Issues Involved:1. Validity of Demand Raised Based on Form 26AS2. Applicability of Service Tax Exemptions3. Invocation of Extended Period of LimitationSummary:1. Validity of Demand Raised Based on Form 26AS:The core issue was whether the demand for service tax could be raised solely based on Form 26AS issued by the Income Tax Department. The Tribunal found that the demand was raised without a proper investigation or examination of the appellant's books of accounts. It cited previous rulings, including Pijush Sharma vs. Commissioner of CGST & Excise and M/s Lord Krishna Real Infra Private Limited vs. Commissioner of Customs, Central Excise & Service Tax, which held that demands based solely on Form 26AS are not sustainable. The Tribunal reiterated that the demand cannot be based merely on Form 26AS without corroborative evidence from the appellant's records.2. Applicability of Service Tax Exemptions:The appellant argued that the services provided to the Indian Army, such as supply/renting of vehicles and supply of fresh food items, were either exempt or non-taxable. Specifically, the appellant claimed exemption under Notification No.30/2012-ST for transport services, as no consignment notes were issued. For the period April 2017 to June 2017, the appellant contended that the income was below the threshold limit for service tax. The Tribunal did not directly address these exemptions in its final ruling as it found the demand itself unsustainable.3. Invocation of Extended Period of Limitation:The appellant contended that the show-cause notice issued on 30th December 2020 was barred by limitation, arguing there was no suppression of facts. The Tribunal agreed, noting that the investigation initiated in April 2015 did not lead to timely action by the Department. The Tribunal held that the extended period of limitation was not invocable due to the Department's inaction and the faulty investigation process.Conclusion:The Tribunal set aside the impugned order, holding that the demand for service tax based solely on Form 26AS was unsustainable and that the extended period of limitation was not applicable. The appeal was allowed with consequential relief.