Service-tax demand requires supported turnover evidence, while qualifying residual receipts receive threshold exemption from tax liability.
Service-tax demand based on a departmental sales-turnover computation lacks support where the acknowledged VAT audit report records a different turnover and VAT payment, while no documentary material supports the lower figure adopted. The resulting assumed taxable-service component is unsustainable. Residual taxable-service receipts of Rs. 9,32,999 fall within the Rs. 10 lakh exemption threshold under Notification No. 33/2012-S.T. for services chargeable under Section 66B of the Finance Act, 1994. No service tax is payable on those residual receipts, and the adjudged liability lacks a sustainable basis.
Issues: (i) Whether the service-tax demand based on the departmental computation of the assessee's sales turnover was sustainable; (ii) Whether the threshold exemption was available for the residual taxable-service receipts of Rs. 9,32,999.
Issue (i): Whether the service-tax demand based on the departmental computation of the assessee's sales turnover was sustainable.
Analysis: The acknowledged VAT audit report in Form E-704 recorded sales turnover of Rs. 1,16,70,673 and payment of VAT attributable to those transactions. The lower authorities adopted a substantially lower sales figure of Rs. 85,89,993 without referring to documentary material supporting that computation. The service-tax demand resulting from the assumed taxable-service component was therefore unsupported by adequate evidence.
Conclusion: The service-tax demand founded on the unsubstantiated turnover computation is unsustainable, in favour of the assessee.
Issue (ii): Whether the threshold exemption was available for the residual taxable-service receipts of Rs. 9,32,999.
Analysis: Notification No. 33/2012-S.T. dated 20.06.2012 exempted taxable services within the threshold limit of Rs. 10 lakh from service tax leviable under Section 66B of the Finance Act, 1994. The residual receipts identified as taxable-service income were Rs. 9,32,999 and fell within that limit.
Conclusion: The threshold exemption is available for the taxable-service receipts of Rs. 9,32,999, in favour of the assessee.
Final Conclusion: The adjudged service-tax liability lacks a sustainable basis, and no service tax is payable on the residual receipts within the notified threshold.