2025 (6) TMI 1595 - AT - Service Tax

Non-payment of service tax - failure to provide relevant documents - assessment done on the basis of best judgement assessment - suppression of facts or not - extended period of limitation - penalty - HELD THAT - In this case the demand of Service Tax has been raised against the appellant on the basis of Form 26AS received from the Income Tax Department as per which it is alleged that the appellant has provided services but not paid any Service Tax for the said services. The period involved in this case is from April 2016 to June 2017 and the Show Cause Notice has been issued on 22nd October 2021. There is no basis in the Show Cause Notice for the allegation with regard to suppression of facts from the Department. In fact the source from where the Revenue got the information was available with them since 2016-17 itself. Thus it cannot be alleged that the appellant had suppressed the facts of providing the said services and not paying Service Tax. Therefore the extended period of limitation is not invokable against the appellant. The impugned demand has been raised on the basis of Form 26AS provided by the Income Tax Department. In this regard without conducting investigation no demand can be raised against an appellant. The appellant was engaged in the activity of providing transportation service as a goods transport agency for which the service recipient was required to pay Service Tax under reverse charge mechanism which has already been paid by the service recipient viz. M/s. Tata Motors Ltd. in this case - no demand is sustainable against the appellant. Consequently no penalty is imposable on the appellant. The impugned order is set aside - appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the demand of Service Tax raised against the appellant on the basis of information received from the Income Tax Department (Form 26AS) without conducting a proper investigation is sustainable.

- Whether the appellant, engaged in providing transportation services as a goods transport agency, is liable to pay Service Tax or whether the liability lies on the service recipient under the reverse charge mechanism as per Notification No. 30/2012-S.T. dated 20.06.2012.

- Whether the Show Cause Notice issued on 22.10.2021 for the period April 2016 to June 2017 is barred by limitation or time barred.

- Whether the appellant suppressed facts from the Department, justifying invocation of extended period of limitation and imposition of penalty.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Service Tax Demand Based on Form 26AS Without Investigation

Relevant Legal Framework and Precedents: The Tribunal referred to the principle that demand of Service Tax cannot be raised solely on the basis of information such as Form 26AS received from the Income Tax Department without conducting a proper investigation or verification. The appellant relied on a precedent where it was held that TDS information alone cannot be the basis for Service Tax demand.

Court's Interpretation and Reasoning: The Tribunal observed that the demand was raised purely on the basis of Form 26AS, which indicated receipt of amounts towards services but no payment of Service Tax. However, the Revenue failed to conduct any independent investigation or verification before issuing the Show Cause Notice and confirming the demand. The Tribunal emphasized that such a demand without investigation is not sustainable.

Key Evidence and Findings: The primary evidence was the Form 26AS information from the Income Tax Department indicating TDS deductions. No further documents or investigation reports were produced to substantiate the demand.

Application of Law to Facts: The Tribunal applied the principle that mere information from the Income Tax Department is insufficient to establish liability for Service Tax without corroborative investigation.

Treatment of Competing Arguments: The Revenue argued that the information from Form 26AS was adequate to raise demand. The Tribunal rejected this, holding that investigation is mandatory.

Conclusion: The demand raised solely on the basis of Form 26AS without investigation is not sustainable.

Issue 2: Liability under Reverse Charge Mechanism for Goods Transport Agency Services

Relevant Legal Framework and Precedents: Notification No. 30/2012-S.T. dated 20.06.2012 mandates that in the case of goods transport agency services, the service recipient is liable to pay Service Tax under reverse charge mechanism. The appellant relied on this statutory provision and a certificate from the service recipient confirming payment of Service Tax.

Court's Interpretation and Reasoning: The Tribunal noted that the appellant provided transportation services as a goods transport agency to M/s. Tata Motors Limited, which had paid the Service Tax under the reverse charge mechanism. The Tribunal held that since the service recipient discharged the Service Tax liability, the appellant was not liable to pay Service Tax on such services.

Key Evidence and Findings: A certificate issued by the service recipient confirming payment of Service Tax under reverse charge was considered crucial evidence.

Application of Law to Facts: The Tribunal applied the reverse charge mechanism provisions and concluded that the appellant's liability was discharged by the service recipient.

Treatment of Competing Arguments: The appellant contended non-liability based on the reverse charge mechanism. The Revenue did not produce evidence to counter the certificate or reverse charge applicability.

Conclusion: No Service Tax liability arises on the appellant as the service recipient has already paid the tax under reverse charge.

Issue 3: Limitation Period for Issuance of Show Cause Notice

Relevant Legal Framework and Precedents: The limitation period for issuance of Show Cause Notice is governed by the relevant Service Tax laws and rules. Extended period of limitation can be invoked only if suppression or fraud is established.

Court's Interpretation and Reasoning: The Tribunal found that the Show Cause Notice was issued on 22.10.2021 for the period April 2016 to June 2017, which prima facie appeared time barred. However, the Revenue alleged suppression of facts to justify extended limitation. The Tribunal noted that the source of information (Form 26AS) was available with the Revenue since 2016-17 and no suppression was established.

Key Evidence and Findings: No evidence was produced by the Revenue to show that the appellant suppressed facts or committed fraud.

Application of Law to Facts: Since no suppression or fraud was established, the extended period of limitation could not be invoked.

Treatment of Competing Arguments: The appellant argued the delay rendered the notice time barred. The Revenue argued otherwise but failed to prove suppression.

Conclusion: The Show Cause Notice was issued beyond the limitation period and the extended period is not invokable.

Issue 4: Imposition of Penalty

Relevant Legal Framework and Precedents: Penalty under Service Tax laws is imposable only if there is wilful suppression or failure to pay tax despite liability.

Court's Interpretation and Reasoning: Since the Tribunal held that no Service Tax liability existed on the appellant and no suppression was established, penalty was not sustainable.

Key Evidence and Findings: Absence of evidence of suppression or wilful non-payment.

Application of Law to Facts: No penalty can be imposed in absence of liability or suppression.

Treatment of Competing Arguments: The appellant denied suppression and liability; the Revenue failed to prove otherwise.

Conclusion: Penalty imposed on the appellant is not sustainable.

3. SIGNIFICANT HOLDINGS

"We find that in this case, the demand of Service Tax has been raised against the appellant on the basis of Form 26AS received from the Income Tax Department... without conducting investigation, no demand can be raised against an appellant."

"In terms of Notification No. 30/2012-S.T. dated 20.06.2012, the service recipient has paid the Service Tax under reverse charge mechanism... we hold that no demand is sustainable against the appellant."

"There is no basis in the Show Cause Notice for the allegation with regard to suppression of facts from the Department... Thus, we hold that the extended period of limitation is not invokable against the appellant."

"Consequently, no penalty is imposable on the appellant."

The Tribunal conclusively determined that the Service Tax demand, interest, and penalty confirmed against the appellant were unsustainable as the appellant was not liable to pay Service Tax under the reverse charge mechanism, the demand was raised without proper investigation, and the Show Cause Notice was issued beyond the limitation period without any suppression of facts. Accordingly, the impugned order was set aside and the appeal was allowed with consequential relief.