2026 (2) TMI 733 - AT - Service Tax

Service tax evidence: entries in income tax records alone cannot sustain a demand; corroborative proof is required.

Whether a service tax demand and invocation of the extended limitation period can rest on Income Tax Department entries alone: entries in ITR/Form 26AS by ... Reliance on Form 26AS/Income Tax data for invocation of extended period - burden of corroborative evidence to establish rendition of taxable service - bona fide belief based on contractual work order negating service tax liability - HELD THAT:- Being merely a job worker undertaking fabrication, the appellant can be said to entertain bonafide belief that no Service Tax liability raises on him. Moreover the Work Order itself specifies that Service Tax is not applicable on the appellant but is within the scope of the receiver of the service. Therefore, the benefits of the appellant cannot be doubted. I also observe that the Show Cause Notice has been issued after more than four years after the amount were received by the appellant in 2015-16. The Tribunals have been consistently holding that extended period provisions cannot be invoked based on the Income Tax Return alone. This Tribunal in the case of Tabassum Enterprises vs. C, CGST & CX [2025 (9) TMI 1275 - CESTAT KOLKATA] held that ' the demand of service tax confirmed in the impugned order, solely relying the data received from CBDT, without adducing corroborative evidence in support, cannot be sustained. ' Following the ratio of the cited case law, set aside the impugned order and allow the appeal filed by the appellant. Issues: Whether a service tax demand and invocation of the extended period of limitation can be sustained solely on the basis of entries in Income Tax Returns/Form 26AS without independent or corroborative evidence connecting the receipts to taxable services.Analysis: The Tribunal examined the Show Cause Notice, the adjudicating order and the Commissioner (Appeals) order where the demand was confirmed on the basis of data obtained from the Income Tax Department (Form 26AS). The appellant produced the work order indicating that service tax was within the scope of the service recipient and submitted that they had a bonafide belief that no service tax was payable. The Tribunal reviewed its own and other Division Bench decisions and relevant precedents which hold that entries in income tax returns or Form 26AS, standing alone, do not constitute sufficient evidence to establish liability under the service tax law. The Tribunal emphasised the necessity of independent/corroborative evidence linking the receipts to taxable services and the need for identification of the service provider, service recipient and consideration. Applying these principles to the record, including the appellant's work order and the absence of corroborative service tax records, the Tribunal found that the extended period provisions could not be validly invoked merely on the basis of Form 26AS data.Conclusion: The demand of service tax confirmed solely on the basis of Income Tax Department data/Form 26AS, without corroborative evidence, is unsustainable; the impugned order is set aside and the appeal is allowed in favour of the assessee.Ratio Decidendi: A demand under the service tax provisions based solely on Income Tax Returns/Form 26AS is not sustainable and the extended period of limitation cannot be invoked unless independent or corroborative evidence is produced to establish rendition of taxable service and the consideration therefor.