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2024 (3) TMI 983 - AT - Service TaxDemand as proposed in the SCN on the basis of mismatch of ST-3 Returns and Balance Sheets/26AS - Invocation of Extended period of limitation - penalties - HELD THAT:- It has been held in a catena of decisions that only the amount received by the Appellant was liable to Service Tax, amounts reflected in Balance Sheets cannot be used to determine the Service Tax liability. The Hon’ble Madras High Court in FIRM FOUNDATIONS & HOUSING PVT. LTD. VERSUS PRINCIPAL COMMISSIONER, OFFICE OF THE PRINCIPAL COMMISSIONER OF SERVICE TAX [2018 (4) TMI 613 - MADRAS HIGH COURT] held that the reporting of income in the P & L is irrelevant for the purposes of determination of service tax payable and thus the basis of the impugned assessment is erroneous. Moreover, income reflected in the Balance Sheet is for Income Tax purposes, which cannot be used for the purpose of service tax without any corroboratory evidence as also supported by M/S LUIT DEVELOPERS PRIVATE LIMITED VERSUS COMMISSIONER OF CGST & CENTRAL EXCISE, DIBRUGARH [2022 (3) TMI 50 - CESTAT KOLKATA]. It is found that since the Appellant was filing ST-3 Returns regularly, the Department’s stand that it could examine the correct facts only on going through the Balance Sheets cannot be sustained as CBEC Circular No.113/7/2009-S.T., dated 23-4-2009 vide F.No.137/158/2008-CX. 4 and CBEC Circular No.185/4/2015-ST dated 30.6.2015 vide F.No137/314/2012 categorically puts duty on the assessing officer to effectively scrutinize the returns at the preliminary stage, as held in M/S. GANNON DUNKERLEY & CO. LTD. VERSUS COMMISSIONER (ADJUDICATION) OF SERVICE TAX, NEW DELHI [2020 (12) TMI 1096 - CESTAT NEW DELHI]. Extended period of limitation - HELD THAT:- Extended period of limitation cannot be invoked solely on audit queries and objections. It is observed that the Department has not adduced any positive evidence to show mala fide intention for evasion of service tax and therefore extended period is erroneously invoked. There are no ingredient of fraud or suppression with an intent to evade payment of tax - the demand raised is completely barred by limitation and accordingly the demand is set aside. Penalty - HELD THAT:- Since there is no element of fraud or suppression, penalty under Section 78 is liable to be set aside. Appeal allowed.
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