2024 (10) TMI 289 - AT - Service Tax

Service tax demand based on commission income in ITR upheld as valid self-submitted consolidated statement

M/s. Manohar Lal Patel Versus Commissioner (Appeals) CGST & Central Excise, Indore

CESTAT New Delhi dismissed the appeal where the appellant challenged a service tax demand based on commission income declared in their Income Tax Return. ... Nature of activity - service or not - appellant had collected some consideration in lieu of providing certain activities carried out for their customers - income from commissions - demand raised by the department based on the information available in the Income Tax Return - HELD THAT:- The demand in the present case is based on Income Tax Return ITR Which stands on different platform than Form 26AS ITR is appellant’s own document self-submitted by the appellant whereas Form 26AS has information about tax deducted/collected and deposited with the government. ITR is the consolidated statement of the assesse about his income, expenses & tax payable during a financial year. Hence, the argument that demand is liable to be set aside as it is based on 26AS, is not correct. Otherwise also, The SCN is based not merely on ITR but also on Profit and loss account filed by the Appellant declaring their income and nature of receipt i.e Commission. Based on those documents it is held that there is no ambiguity with respect to the alleged income of appellant as commission which otherwise is not disputed by the appellant. The ITR figures are duly audited and declared by them to the Income Tax department. It is found that during the financial year 2014-15, the Appellant’s income from Agriculture has duly been considered and has not been included in the amount of demand confirmed - there are no infirmity in the order under challenge - appeal dismissed. Issues:1. Whether the appellant is liable to pay service tax on commission income declared in the Income Tax Return for the financial years 2014-15 to 2017-18.2. Whether the demand raised by the department is justified based on the information available in the Income Tax Return.3. Whether the appellant's agricultural income should be considered in calculating the service tax liability.Analysis:1. The appellant declared themselves as a General Commission Agent in the Income Tax Return and reported commission income under the head 'Other Income' and sub-head 'Commission.' The appellant argued that apart from commission income, they also had agricultural income during the year 2014-15, which is not subject to service tax. The appellant contended that the tax liability under direct taxes was discharged. The appellant's status as a Commission Agent remained consistent in subsequent years. The tribunal observed that the demand was based on the Income Tax Return, which is different from Form 26AS, and upheld the order dismissing the appeal.2. The appellant argued that the department wrongly alleged suppression as the figures in Form 26AS were available to the department from the relevant year itself. The appellant cited a tribunal decision to support their claim that relying solely on Form 26AS for service tax claims is incorrect. The department contended that the appellant's agricultural income was separately mentioned in the Income Tax Return and profit and loss statement. The appellate authority re-quantified the demand, considering the appellant's failure to provide evidence of non-taxability of business income. The tribunal found no ambiguity regarding the appellant's commission income, as declared in the audited Income Tax Return.3. The tribunal noted that the appellant's demand was based on the Income Tax Return and not solely on Form 26AS. The appellant was not registered with the Service Tax Department and had not filed ST-3 returns. The tribunal distinguished the case from those cited by the appellant, emphasizing that the appellant's income from agriculture was duly considered and not included in the demand amount. The tribunal upheld the order, stating that the appellant had not disputed receiving the amounts mentioned in the Income Tax Return.This detailed analysis of the judgment highlights the key arguments presented by both parties and the tribunal's reasoning in upholding the order.