AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 1519
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....ing its service tax liability under the self-assessment scheme. On verification of third-party data, namely ITR/TDS data for the Financial Year 2016-17, the Revenue initiated an enquiry and formed the view that the Appellant had received a sum of Rs.98,97,671/- towards provision of taxable services, without declaring such consideration in the ST-3 Returns or paying service tax thereon. A Show Cause Notice dated 19.08.2021 was accordingly issued under Section 73 of the Finance Act, 1994, demanding service tax of Rs.14,84,651/- along with interest and penalties. The Adjudicating Authority, vide Order-in-Original dated 28.11.2022, confirmed the said demand. 3. Upon appeal by the Appellant, the Commissioner (Appeals), vide Order-in-Appeal dated 18.01.2024, set aside the Order-in-Original and remanded the matter to the adjudicating authority for fresh adjudication. Pursuant to the remand, the adjudicating authority passed a fresh Order-in-Original dated 10.06.2024, confirming a reduced service tax demand of Rs.8,99,647/- along with interest and penalties under different provisions of statute. The Appellant appealed once again, and the Commissioner (Appeals) passed the impugned order ....
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....rrive at reasonable certainty of liability on grounds set out in the notice before determination of recoverable tax even if by failure on the part of the noticee to furnish evidence in support of claim proposed to be disallowed. Mere iteration of higher income reported under Income Tax Act, 1961 - with its own unique stipulations on inclusions - does not answer to that obligation resting on service tax authority without even the least cursory attempt at investigation of the assessee. 6. It would appear that the initiation of recovery proceedings under section 73 of Finance Act, 1994 solely on the basis of information received from third parties was so rampant and undesirable that the Central Board of Indirect Taxes & Customs (CBIC), vide circular dated 26th October 2021, instructed that '2. In this regard, the undersigned is directed to inform that CBIC vide instructions dated 01.04.2021 and 23.04.2021 issued vide F.No.137/472020-ST, has directed the field formations that while analysing ITR-TDS data received from Income Tax, a reconciliation statement has to be sought from the taxpayer for the difference and whether the service income earned by them for the corre....
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....cause notice. The show cause notice dated 16.04.2019 states that the same is enclosed with two annexures. AnnexureI is work sheet. The work sheet states the turnover of the respondent for the year 2013-14 as reflected in income tax return and turnover reflected in ST-3 return as nil and the difference between the two turnovers and service tax @ 12.36% on the said difference. Annexure-II is a letter dated 25.10.2018 issued by Superintendent (Data Cell) presuming that the respondent has shorted reported turnover in their ST3 return to the extent of difference stated in Annexure-I. The entire show cause notice nowhere examines as to on what account the turnover has taken place. The said show cause notice was issued without examining the activity of the respondent and without examining the reason for difference in turnover reported in income tax return and ST-3 return. It was presumed in the show cause notice that the entire turnover reported in income tax return was on account of provision of taxable service and by calculating 12.36% of that turnover, service tax demand was raised. The fundamentals of prosecution such as framing charges on the basis of admissible evidence is absent in....
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.... the records and examine the objection raised with reference to the records and facts of the case and take a view whether there is a sustainable case for issue of Show Cause Notice. Such vital aspects of framing of charges have been missing in the present case. The charges in the Show Cause Notice have to be on the basis of books of account and records maintained by the assessee and other admissible evidence. The books of account maintained by M/s Sharma were not looked into for issue of above stated two Show Cause Notices. Therefore, the transactions recorded in the books of account cannot be held to be contrary to the facts. Therefore, we hold that the said Show Cause Notices are not sustainable. Since the said Show Couse Notices are not sustainable, appeal bearing No.ST/890/2010 filed by M/s Sharma is allowed and appeal bearing No. ST/949/2010 filed by Revenue is dismissed. Miscellaneous Applications are also stand disposed of. Cross Objection also disposed of." (c) In the case of Kush Constructions [2019 (5) TMI 1248 - CESTAT ALLAHABAD], it was held as follows:- "After hearing both the sides duly represented by Shri A.K. Singh authorized representative of the ....
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....e Notice itself. 8. An examination of the record reveals that nothing has come on record to demonstrate that any independent investigation was conducted by the Revenue prior to issuance of the Show Cause Notice. The entire edifice of the demand rests upon TDS/Form 26AS data obtained from third-party sources. While a TDS certificate or Form 26AS is an official document reflecting tax deducted at source-containing the name, address, PAN of the deductor and deductee, and the nature of the payment. It is, at best, a starting point for inquiry. It is not, by itself, conclusive proof of taxable service rendered or of service tax liability incurred. Once the department had access to such TDS data, including the PAN and TAN of the paying parties, it was well within its power and, indeed, its duty, to conduct independent verification from those very parties to ascertain whether taxable services had in fact been provided. That exercise was conspicuously absent here. 9. Furthermore, service tax and income tax operate under separate and independent statutory regimes. Consistent with the settled position of this Tribunal, a demand of service tax is not sustainable merely on the strength o....