Comparative Return Matching Insufficient: revenue must prove amounts are consideration for identifiable taxable services or demands fail.

Challenge to service-tax demands based on reconciling Form 26AS with ST-3 returns: the article emphasises that revenue cannot sustain a demand merely by numeric comparison of statutory returns. It outlines the evidentiary principle that amounts must be proved to constitute consideration for identifiable taxable services, with identification of service recipients and taxable value; non-service entries must be excluded and abatement applied. Applied correctly, verification may require exclusion of items like interest under non-service heads; absent such proof, the major part of demand should be rejected.

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Issues: Whether the demand of service tax raised by comparing Form 26AS figures with ST-3 returns (for 2011-12 to 2014-15) without independent evidence identifying taxable services, service recipients and consideration can be sustained, and whether the adjudicating authority rightly dropped the major part of the demand after examining the respondent's explanations and calculations.

Analysis: The dispute arises from differential figures in Form 26AS and ST-3 returns. Form 26AS contains various tax-deduction entries including amounts under sections 194A, 194C, 194I, 194H and 194J of the Income Tax Act, 1962. Only certain categories (194C, 194H, 194I, 194J) are relevant to taxable services and require adjustment for abatement and taxable value calculations. The adjudicating authority considered the respondent's comparative calculation, excluded non-service items (such as interest under 194A), applied appropriate adjustments, and found that the respondent had not under-declared taxable value; on the material before it the authority dropped the major demand. The tribunal relied on precedents holding that revenue must establish that amounts in balance sheets or other statutory returns represent consideration for taxable services and that mere comparison without proof of service, service recipient and consideration is insufficient to sustain a demand.

Conclusion: The demand raised by revenue by comparing Form 26AS with ST-3 returns, without independently establishing that the differential amounts constituted consideration for taxable services, cannot be sustained; the adjudicating authority correctly dropped the major part of the demand after verification and the appeal is dismissed.

Ratio Decidendi: A demand for service tax cannot be confirmed solely by comparing figures in external statutory returns (such as Form 26AS) and ST-3 returns; revenue must prove with evidence that the amounts represent consideration for identifiable taxable services, service recipients and taxable value, failing which such demands must be rejected.

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