TMI Blog2023 (7) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... vice. It is settled principle of law that unless and until the clear analysis of the activity done by the assessee is carried out and classification of service is ascertained, demand of service tax only on the basis of data provided by the CBDT cannot be confirmed. It is found that the Income tax return and Form 26AS is not a statutory documents for determining the taxable turnover under the Service Tax provisions. The said documents are at the most relevant for Income Tax purpose only. Whereas under the Service Tax provisions, the service tax is chargeable on the taxable service provided. Thus, we find that the whole basis of show cause notice is incorrect - it is not found that the demand confirmed on the basis of Income Tax data to be sustainable. It is also found that absolutely no proper inquiry has been made by the department with the Appellant as regard the disputed difference. No statement in this regard asking them about the income declared to the income tax authorities has been recorded. No evidence was produced by the department to show that the amounts declared by the appellant before the income tax authorities are pertaining to the taxable services. In absence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of facts. Therefore, neither there was intent to evade payment of Service tax, nor to suppress any facts from the revenue, and hence, the adjudicating authority grossly erred while invoking extended period of limitation, and hence, the entire proceeding is liable to be quashed on the ground of time bar also. Thus, the show cause notice was admittedly issued only for the period 2015-16, whereas the demand in the Order in-original was confirmed for 2015-16, 2016-17 and 2017-18 (up to June 2017) which is a serious error on the part of the adjudicating authority - it is found that when no demand was raised in show cause notice as no quantification was made, the demand cannot be confirmed in the adjudication order without quantifying the demand in the show cause notice, for this reason also the demand for the period which was neither quantified nor raised in the show cause notice is ab-initio, void and illegal and the same is not sustainable on this ground alone. Appeal allowed. - Service Tax Appeal No. 10858 of 2022 - DB - Final Order No. 11540 / 2023 - Dated:- 19-7-2023 - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR And HON'BLE MEMBER ( TECHNICAL ) , MR. C L MAH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same by the appellant. The Appellant had provided only one taxable service, on which it had undisputedly discharged service tax, and reported the same in the ST-3 return. The Appellant had not discharged any service tax on the remaining exempt/ non-taxable services, which were also not reported in the ST-3 returns. Appellant had taken service tax registration in the year 2005 and they had been following the same practice of not reporting the exempted transaction since the year 2005. 3.1 He further submits that the department issued letter to the appellant on 06.10.2020 asking reason behind difference. The details were requested for almost five years old period, and before the appellant could respond the letter dated 06.10.2020 with supporting documents, department issued the show cause notice dated 21.10.2020, which was only after 15 days from the letter dated 06.10.2020. 3.2 He also submits that in case of GTA services, as per the Notification No. 30/2012-ST dated 20.06.2012 100% service tax was payable by the recipient of services, where the recipient was a factory or first stage or second stage dealer registered under the erstwhile Central Excise Laws, or body corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. Vs. Commissioner of Central Excise, Ahmedabad 2022(63)GSTL 64 (Tri. Ahmedabad). (ii) Union Of India Vs. Garware Nylons Ltd. 1996(87) ELT 12 (SC) (iii) Commissioner of Customs, Mundra Vs. Sunrise Traders -2022(382)ELT 23 (SC) (iv) Commr. Of C.Ex., Bangalore Vs. Brindavan Beverages Pvt. Ltd.- 2007(213)ELT 487(SC) 3.6 He also submits that the show cause notice was time barred and the extended period was wrongly invoked as there was neither suppression of facts, nor any wilful misstatement, with intent to evade payment of tax. Department invoked the extended period alleging suppression of facts, for the reason that the exempt/non-taxable services were not disclosed in the service tax returns, which were otherwise reported in the income tax returns, to the Income Tax department. The service tax department had granted service tax registration to the Appellant in the year 2005 and had conducted various audit from the year 2005 up to June 2017 and it had never objected to the Appellant with respect to the practice of not reporting the exempted or non-taxable turnover in the Service tax returns, or never intimated the Appellant that this practice could be consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the entire amount received by the appellant as reflected in said ITR returns and in the Form 26AS being consideration for services provided and without examining whether the difference was because of any exemption or non taxable services, since it is not legally permissible to presume that the entire differential amount was on account of consideration for providing services. We further find that Income tax return and Form 26AS is not a statutory documents for determining the taxable turnover under the Service Tax provisions. The said documents are at the most relevant for Income Tax purpose only. Whereas under the Service Tax provisions, the service tax is chargeable on the taxable service provided. Thus, we find that the whole basis of show cause notice is incorrect. We, therefore, do not find the demand confirmed on the basis of Income Tax data to be sustainable. 5.3 We also find that in the present matter for confirmation of service tax demand revenue has only relied upon the figures/ data provided by the Income Tax Department. The said figures / data were submitted by the appellant under the provisions of Income-tax Act. Income-tax and service tax are two different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutory obligation to make tax deduction as a collecting agency, as envisaged under the Income-tax law. The Commissioner (Appeals) has, therefore, rightly set aside the orders-in-original insofar as respondent of Service Tax Appeals Nos. 170, 171 and 173 of 2005 was concerned. In the matter of Commissioner of C.Ex. Jaipur-I vs. Tahal Consulting Engineers Ltd. - 2016 (44) S.T.R. 671 (Tri. - Del.) the Tribunal also observed as under :- 2. The brief facts of the case are that respondents are engaged in providing taxable service. Certain proceedings were initiated against them for not paying the Service Tax mainly on the basis of income-tax return filed by them at Jaipur. It is the case of the Revenue that the respondent failed to discharge the Service Tax on full taxable value as reflected in the income-tax returns. Accordingly, the original authority, after due process, confirmed the Service Tax of Rs. 8,25,789/- under the category of Consulting Engineer service . He also imposed penalties under various sections on the respondent. On appeal by the respondent, the learned Commissioner (Appeals) vide impugned order set aside the Order-in-Original and allowed the appeal. Aggri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax provisions. We find that Form No. 26AS is maintained on cash/ receipt basis by the Income Tax Department for the purpose of tax deducted at source, etc. being the relevant data for Income Tax. Whereas under the Service Tax provisions, the service tax is chargeable on mercantile basis (accrual basis) on the service provided whether the value of such service is received or not. Thus, we find that the whole basis of show cause notice is incorrect and/or misconceived 5.5 We also find that absolutely no proper inquiry has been made by the department with the Appellant as regard the disputed difference. No statement in this regard asking them about the income declared to the income tax authorities has been recorded. No evidence was produced by the department to show that the amounts declared by the appellant before the income tax authorities are pertaining to the taxable services. In absence of any such evidence, it cannot be said that the income declared by them to the income tax authorities is attributable to the taxable services provided by them to their clients during the disputed period. We find that in the case of CCE, Ludhiana v. M/s. Ramesh Studio Color Lab [final ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in cases where the service recipient is body corporate, partnership firm, etc. as specified in the said notification appellant does not become a person liable for payment of service tax. 5.8 We observe that the adjudicating authority in his order assumed that it is not clear that whether the service recipients are individuals or body corporate for this reason he confirmed demand on the entire value. In this regard we find that the appellant in their additional submission given the details of service recipient of GTA, wherein all the service recipient are body corporate, dealer of excisable goods, registered factory, a partnership firm which are covered under exemption notification, whereby the service recipient is liable to pay service tax. Therefore, the assumption of the adjudicating authority is absolutely incorrect without any basis. We find that out of the total value which was taken for calculating the Service Tax demand on the part of the value pertains to the non-taxable transportation service provided to GTA and not as a GTA and the same is covered in Negative List‟ vide Clause (p)(i) of Section 66D of the Finance Act, 1994 this transaction is also not taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and illegal. 5.13 The impugned order also alleged that the appellant failed to submit the ST-3 returns for April-17 to June-17. In this regard we find force in the submission of the appellant that they duly filed the said return online which is also available on ACES portal the same is accessible to the Adjudicating Authority. Moreover, without prejudice to above fact, merely for not filling of ST-3 return, when there is no liability of service tax, no demand or penalty on this count is sustainable against the appellant. 5.14 We find that the appellant have vehemently argued that the demand of extended period is not sustainable as no suppression of fact or mala fide exist on the part of appellant. In this regard, on going thru the facts we find that Department has invoked the extended period alleging suppression of facts, for the reason that the exempt/non-taxable services were not disclosed in the service tax returns. It is observed that the appellant obtained service tax registration in the year 2005 and the department had conducted various audit from the year 2005 up to June 2017 and it had never objected to the Appellant with respect to the practice of not reporting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the judgment of the Hon'ble Supreme Court in the case of Tamil Nadu Housing Board Vs. Collector of Central Excise, Madres reported in 1994 (74) E.L.T. 9 (SC), wherein the Apex Court held that limitation for extended period invokable only if existence of both situations (1) suppression, fraud, collusion etc. and (2) intent to evade payment of duty proved. The Apex Court further held that once the Department is able to bring on record material to show that the appellant was guilty of any of those situations which are visualised by the Section, then only the burden shifts on the assessee. From the above judgments, coupled with the facts in the present case discussed above the demand for the longer period is hit by the limitation also. 5.15 Without prejudice to the above discussion we find that the show cause notice was admittedly issued only for the period 2015-16, whereas the demand in the Order in-original was confirmed for 2015-16, 2016-17 and 2017-18 (up to June 2017) which is a serious error on the part of the adjudicating authority. We find that when no demand was raised in show cause notice as no quantification was made, the demand cannot be confirmed in the adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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