Reliance on Income tax records alone cannot sustain service tax demands; absence of corroborative evidence invalidates extended limitation invocation.

A service tax demand based solely on Income tax returns/Form 26AS entries is unsustainable where there is no independent verification or corroborative evidence identifying the service provider, the nature of services rendered, the recipient and consideration; reliance on third party income tax data does not satisfy the evidentiary requirement and cannot validly justify invoking the extended period of limitation. Consequently, such demands confirmed without contemporaneous verification should be set aside and the appeal allowed, with any consequential relief to follow as per law.

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Issues: Whether a service tax demand raised and confirmed solely on the basis of Income-tax returns/Form 26AS data, without independent verification or corroborative evidence of provision of taxable services, and by invoking the extended period of limitation, is sustainable.

Analysis: The demand under challenge was issued on the basis of figures from Income-tax records (Form 26AS) relating to earlier financial years without any contemporaneous verification of the nature of receipts, identification of service recipients, or proof of taxable services rendered. Multiple precedents were applied which hold that entries in income-tax returns or Form 26AS, maintained for income-tax/TDS purposes, do not by themselves establish liability under the service tax provisions; independent or corroborative evidence linking service provider, service rendered, recipient and consideration is required. Where such verification or corroboration is absent, reliance on third-party income-tax data to invoke extended limitation provisions and confirm a service tax demand is impermissible.

Conclusion: The demand confirmed solely on the basis of Income-tax/Form 26AS data without independent corroborative evidence or verification is not sustainable; the impugned demand and confirmation are set aside in favour of the assessee.

Final Conclusion: The appeal is allowed and the impugned order confirming the service tax demand on the stated basis is set aside; consequential relief, if any, shall follow as per law.

Ratio Decidendi: Service tax demands cannot be sustained solely on the basis of entries in Income-tax returns or Form 26AS; independent corroborative evidence connecting service provider, service rendered, recipient and consideration is essential, and in absence of such verification the extended period of limitation cannot be invoked.

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