2025 (2) TMI 629 - AT - Service Tax

Revenue cannot assume all receipts and payments are taxable services without identifying specific service categories

CESTAT Kolkata held that Revenue cannot assume all receipts and payments constitute taxable services without identifying specific service categories. The ... Service tax on amount transferred between the appellant's bank accounts - Service Tax demand on amounts credited to the ledger of various debtors - HELD THAT:- The Show Cause Notice has taken into consideration the entire bank deposit and then subtracted the amount collected and reflected in the appellant’s ledger while raising the demand. However, it is observed that the appellant while referring to paragraph 18 of the impugned order submits that intra-bank transfer amounting to Rs.11,11,34,154/- was required to be deducted whereas by mistake, only Rs.9,45,56,790/- has been deducted. It is found that this fact of wrong deduction of the amount of Rs.9,45,56,790/- has been accepted by the Revenue also in their grounds of appeal. The appellant's contention is Rs.9,45,56,790/- has been wrongly deducted instead of deduction of 11,11,34,154/-. There is no evidence available on record regarding deduction of Rs.11,11,34,154/-, pertaining to intra-bank transfer, as claimed by the appellant. Thus, the reconciliation of the deduction needs to be reconsidered by the adjudicating authority. Accordingly, for the purpose of re-quantification of the taxable value, the issue needs to be remanded back to the adjudicating authority. The appellant has also submitted that the Service Tax has been levied on the amount credited to the ledger of various debtors by considering the same as ‘consideration’ received. The submission made by the appellant in this regard is agreed that the Revenue cannot consider all the receipts and payments towards taxable services without identifying a particular category of service under which the said amount would be taxable. In such circumstances, there are merit in the submission of the appellant that the entire duty liability needs to be reverified on the basis of the details/reconciliation submitted by the appellant. The appellant viz. M/s. Indcap Advisors Pvt. Ltd., is directed to submit all the details before the adjudicating authority and co-operate in the reconciliation for arriving at the liability to Service Tax. Conclusion - The Revenue cannot assume all receipts and payments are taxable without identifying specific taxable services. The issue is remanded back to the adjudicating authority for the purpose of re-quantification - Appeal are disposed of by way of remand. The issues presented and considered in the judgment are as follows:1. Whether the Service Tax demand on the amount transferred between the appellant's bank accounts is justified.2. Whether the Service Tax demand on amounts credited to the ledger of various debtors is valid.Issue-Wise Detailed Analysis:Issue 1:- Relevant legal framework and precedents: Section 66B of the Finance Act, 1994.- Court's interpretation and reasoning: The appellant argued that the amount transferred between its bank accounts was not related to any service and therefore not subject to Service Tax. They cited the case of Hindustan Coca Cola P. Ltd. v. Commissioner of Service Tax, Delhi to support their position.- Key evidence and findings: The appellant claimed that the Service Tax demand was based on information from bank statements without identifying specific taxable services.- Application of law to facts: The Tribunal found that there was no evidence of the claimed deduction of Rs.11,11,34,154 for intra-bank transfers. They concluded that the issue needed to be reconsidered by the adjudicating authority.- Conclusions: The Tribunal remanded the issue back to the adjudicating authority for re-quantification of the taxable value based on proper reconciliation.Issue 2:- Relevant legal framework and precedents: Section 66B of the Finance Act, 1994.- Court's interpretation and reasoning: The appellant contended that the Service Tax on amounts credited to debtors' ledgers was unjustified as these amounts were not consideration for taxable services. They argued that the duty liability needed to be reverified based on the details and reconciliation provided.- Key evidence and findings: The Revenue re-quantified the demand based on various grounds, including intra-bank fund transfers and taxable income reflected in ST-3 Returns.- Application of law to facts: The Tribunal agreed with the appellant that the Revenue cannot assume all receipts and payments are taxable without identifying specific taxable services. They directed the appellant to submit details for reconciliation to determine the correct liability to Service Tax.- Conclusions: The Tribunal remanded the issue back to the adjudicating authority for re-quantification based on the details provided by the appellant.Significant Holdings:- The Tribunal remanded both appeals filed by the appellant and the Revenue for re-quantification of the taxable value based on proper reconciliation and verification of the duty liability.Overall, the Tribunal's decision focused on the lack of proper identification of taxable services and the need for accurate quantification of the Service Tax liability based on the evidence and reconciliation provided by the appellant.