TaxTMI 
TaxTMI 
2026 (7) TMI 840
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.... Tax authorities to verify the tax liability of the appellant during the period from Financial Year 2015-16 to Financial Year 2017-18 (up to June, 2017). According to the Revenue, scrutiny of the Income Tax Returns and Form 26AS furnished by the appellant revealed that receipts from services had been reflected therein, while the appellant had neither obtained registration under the provisions of the Finance Act, 1994 nor discharged Service Tax on the said receipts. 3. Pursuant thereto, the appellant was called upon to furnish the relevant records including copies of the Income Tax Returns, Form 26AS, ST-3 Returns and other connected documents pertaining to the material period. It is the case of the Revenue that although the appellant furnished copies of the Income Tax Returns and Form 26AS, no satisfactory explanation regarding the nature of the services rendered or the taxability thereof was furnished during the course of investigation. Upon scrutiny of the documents so produced, it was alleged that the appellant had received aggregate consideration amounting to Rs.78,13,174/- during the relevant period towards taxable services but had failed to discharge the corresponding Serv....
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....;s Chartered Accountant certifying that the amounts received from M/s. ICICI Lombard represented commission earned for facilitating issuance of insurance policies to purchasers of two-wheelers. The appellant further raised the contention before the Commissioner (Appeals) that the demand could not have been sustained merely on the basis of the figures reflected in the Income Tax Returns or Form 26AS without first establishing the precise nature and taxability of the underlying transactions. The Ld. Commissioner (Appeals), however, being not satisfied with the explanations offered by the Appellant, upheld the Order-in-Original in its entirety by way of the impugned Order-in-Appeal No. 66/BOL-ST/2024-25 dated 11.06.2024. 4.3. Aggrieved by the confirmation of the above demand of Service Tax, along with interest, and imposition of penalties thereon, the appellant has filed the instant appeal. 5. The Ld. Consultant appearing on behalf of the appellant, while assailing the impugned order, inter alia, advanced the following submissions: - (i) That the adjudicating authority has confirmed the entire demand of Rs.11,56,266/-, although the operative portion of the Order-in-Orig....
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..... In the present case, Service Tax has been sought to be levied against the appellant on the basis of information gathered from the Central Board of Direct Taxes (CBDT) vis-à-vis Form 26AS for the Financial Years 2015-16 to 2017-18 (up to June, 2017) on the premise that no valid documentary evidence has been provided by the appellant and also that they did not actively participate during the course of investigation or the adjudication proceedings before the original authority. However, it is evident from the records that, during the appellate proceedings before the ld. first appellate authority, the appellant had in fact produced material documents explaining the true nature of the services rendered and the source of the receipts reflected in the Income Tax Returns and Form 26AS. Once such evidence had been brought on record, it became incumbent upon the Revenue to examine the same on its own merits and, if necessary, dislodge the factual assertions by leading cogent and affirmative evidence. 8.1. The main stand taken by the appellant is that the amounts reflected in the Income Tax Returns represented commission received from M/s. ICICI Lombard, which is an insurance comp....
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....ve been fastened upon the appellant. 9.2. The Ld. Commissioner (Appeals), in the impugned order, has further recorded that the appellant failed to produce evidence showing that M/s. ICICI Lombard had actually discharged the Service Tax liability under the reverse charge mechanism, for confirming the impugned Service Tax liability against the appellants. I am unable to agree with the aforesaid reasoning adopted by the ld. appellate authority in the impugned order. The obligation to establish payment of Service Tax by the insurance company cannot, by any stretch of imagination, be shifted upon the appellant. If the Revenue entertained any doubt regarding discharge of tax by the recipient of service, it was always open to the Department to verify the records of the insurance company and proceed in accordance with law. The inadequacy of the investigation cannot be fastened upon the appellant. Having established, through documentary evidence, that the receipts were commission received from the insurance company, the appellant cannot be faulted merely because the Revenue has not verified whether the recipient had discharged its corresponding tax liability. 10. Apart the above, it i....
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....d that the Revenue has failed to establish that the commission received by the appellant was exigible to Service Tax at their end. On the other hand, the documentary evidence placed on record clearly supports the appellant's stand that the liability, if any, was required to be discharged by the insurance company in terms of Rule 2(1)(d)(i)(A) of the Service Tax Rules, 1994. The contrary findings recorded in the impugned Order-in-Appeal are thus founded upon assumptions and presumptions rather than legally admissible evidence and are, therefore, not sustainable in law. Thus, I find that the demand of Service Tax along with interest confirmed in the impugned order is legally not sustainable. As the services rendered by the appellant are not liable to Service Tax, there was no need to take the Registration from the Department for the said services. Moreover, the necessary ingredients for imposition of the impugned penalties under the provisions of the Finance Act, 1994 are also found to be absent in this case. Accordingly, I also find that the penalties imposed on the appellant are liable to be set aside. 12. Consequently, the demand of Service Tax amounting to Rs.11,56,266/-, ....