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of <h1>Tribunal Orders Reevaluation of Tax Liability; Insufficient Evidence Found, Requires Fresh Adjudication Considering Exemptions.</h1> The Tribunal set aside the demand for duty, interest, and penalty, directing a reevaluation of the appellant's tax liability. It emphasized the necessity ... Levy of service tax - sales/gross receipts - demand worked out on the basis of Income Tax Returns for the year 2014-15 to 2017-18 filed by the appellant and on the basis of 26 AS and profit and loss accounts for the aforesaid period - Corroborative evidences or not - time limitation - HELD THAT:- It is an established principle of law that no tax can be demanded on figures artificially worked out, merely on the basis of some third party data unless they are co-related independently with other evidence. The sustenance of demand amount without other corroborative evidence cannot be upheld. Moreover, due abatement of threshold exemption limit, if admissible, is a right of the appellant and cannot be ignored and therefore cannot be denied. Moreover, it is held in a series of cases that no tax is leviable on the tax component perse. The demand for duty as made out in the show cause notice and consequent demand for payment of interest and penalty cannot be considered and is not made out. The impugned order of the lower authority is set aside and the matter remanded with the direction that due abatement as admissible to the appellant based on threshold limits, as well as discounting of sales that are VAT paid be considered before re-adjudicating the matter afresh. Appeal disposed off by way of remand. Issues Involved: Confirmation of demand for service tax based on sales/gross receipts for the years 2014-15 to 2017-18 using Income Tax data (ITR-5), applicability of demand for the second half of 2014-15 and post period of 2017-18, consideration of threshold exemption, and calculation of tax liability based on third party data.Summary:1. The appeal challenges the Order-in-Appeal concerning the confirmation of service tax demand based on Income Tax data for the years 2014-15 to 2017-18. The demand for the second half of 2014-15 and post period of 2017-18 was calculated on a 'deemed' basis due to lack of specific information. The show cause notice primarily relies on third party data without additional substantiation.2. The department alleged the appellant's liability to service tax based on the provided table showing income and expenses liable to service tax for each financial year. The appellant contested that part of the demand for April 2014 to September 2014 was time-barred and the demand for July 2017 to March 2018 fell outside the service tax scope due to the introduction of GST. They argued that the department's demand was arbitrary and failed to consider the threshold exemption available to them.3. Regarding the demand for 2014-15, the calculation for the half-year from October 2014 to March 2015 was deemed, which the appellant deemed arbitrary and illegal. They referenced a court decision to support that certain costs could only be included in taxable service value from May 2014 onwards. The appellant also argued against taxation on amounts for spare parts on which VAT was paid, emphasizing the need for abatement in such cases.4. The appellant provided a detailed breakdown of the taxable value for the years 2015-16 to 2017-18, highlighting the exempt and taxable components. They emphasized that tax calculations should consider values of sales on which VAT was paid, not just gross figures from the balance sheet.5. The Tribunal concluded that demanding tax based solely on third party data without independent corroboration was unsustainable. The appellant's right to threshold exemption and abatement could not be ignored. The demand for duty, interest, and penalty was set aside, directing a reevaluation considering the appellant's entitlement to abatement and VAT-paid sales.6. The Tribunal noted the appellant's lack of response to the show cause notice and absence at the personal hearing but highlighted that the appellant presented relevant evidence during the Tribunal hearing, which should be considered by the lower authority in the fresh adjudication.7. The appeal was disposed of by remand for reevaluation based on the directions provided, emphasizing the consideration of abatement and VAT-paid sales in the calculation of tax liability.
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