TaxTMI 
TaxTMI 
2026 (5) TMI 643
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....nt produces a copy of the Rules of Conduct issued by K-Link Healthcare India Pvt. Ltd. He submits that as per the Rules given therein, the Appellant is initially required to buy the goods on payment of a certain amount from them and then later on introduce four persons to the company, by selling the same to them. Based on the same, the Appellant would be paid a certain amount by the company. The learned Counsel submits that it is basically the buying of the goods from K-Link Healthcare India Pvt. Ltd. and selling the same to four other persons who pay the full amount, who are actually introduced to the K-Link by the Appellant. 4. He further submits that this activity does not amount to any provision of service under the 'Business Auxiliary Service'. He submits that the quantification of the demand in the Show Cause Notice is also arbitrary and based on assumptions and not based on actual facts. 5. He takes me through to Annexure A of the Show Cause Notice. He points out that during year 2015-16, the value of service has been taken as amounting to Rs.20,10,211/- on which Service Tax has been calculated as Rs.2,91,482/-. However, for the period 2016-17, arbitrarily the value ha....
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.... the 26 AS of Income Tax Returns, which show that the activity undertaken by the Appellant is that of a Commission Agent only and not that of a trader of buying and selling of goods. The Learned AR relies on the detailed findings of the lower authorities to confirm the demand. Accordingly, he prays that the Appeal may be dismissed. 10. Heard both sides, perused the appeal papers and the documentary evidence placed before me. 11. I have gone through the quantification dispute raised by the Appellant. I find that the Revenue has arbitrarily taken the taxable value for the period 2016-17 by simply doubling the total value available for the period 2015-16. This kind of arbitrary enhancement of the value is not provided for any statutory provisions. On the other hand, it is clearly seen that Income Tax form 26 AS shows the turnover as Rs.1,677,356/- and as Rs.1,50,767/- for the period 2017-18. The demand, if any, would be as per the following table. Annexure-A Annexure in respect of M/s. MUSTAFA ALI 78, COWIES GHAT ROAD (2ND FLOOR), SHIBPUR, HOWRAH-711102 Year Total Gross Value provided as per STR Sale of service as per CBDT DATA Value for Bes....
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.... 8. Further, I note that the Show Cause Notice dated 08.10.2015 has been issued for the period 2010-11 to 2011-12. It is also evident that the notice was issued primarily on the basis of Income Tax Returns and Form 26AS, wherein the amount was reflected as service income. In respect of demands made based on the Form 26AS and IT Returns, this Tribunal in the case of Tabassum Enterprises vs. C, CGST & CX vide Final Order No.75452/2025 dated 19.09.2025 (Service Tax Appeal No.75037 of 2025) has held as under :- "5. I find that the present demand has been raised and confirmed on the basis of data provided by the Central Board of Direct Taxes (CBDT). It is observed that the said demand has been confirmed without the support of any independent or corroborative evidence from the Service Tax records. Such mechanical reliance on Income Tax data, without verification of the nature of receipts or proof of taxable services rendered, is impermissible in law. It is a settled legal position that mere entries in income tax returns or Form 26AS cannot, by themselves, establish liability under the Finance Act, 1994, unless corroborated by evidence demonstrating rendition of taxable servic....
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....ther, in the case of M/s. Indian Machine Tools Manufacturers Association v. The Commissioner of C.Ex., Panchkula [Final Order No. 60403 of 2023 dated 18.09.2023 in Service Tax Appeal No. 4174 of 2012 - CESTAT, Chandigarh], the Tribunal, Chandigarh has held as under: "11. Coming to third and final issue as to whether any demand can be sustained on the basis of difference between the figures of ST-3 Returns and the balance sheets, we find that it is a settled principle of law that service tax can be levied only when there is a clear identification of service provider, service recipient and consideration paid for the same. In the absence of any such evidence of the service recipient and the service provided, service tax cannot be demanded and confirmed. For this reason, we are of the considered opinion that it is not open for the Department to raise demands on the basis of other statutory returns like Income Tax Returns or balance sheets without proving that such service has been rendered by the assessee and consideration thereof has been received. Similarly, no service tax demand can be raised and confirmed on the basis of notional income." (Emphasis supplied) 5.....