The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that demand cannot be raised based on difference in ST-3 Returns and Form 26AS without examining the reasons for difference.
The bench of Dr. Rachna Gupta (Judicial Member) has observed that demand cannot be raised based on difference in ST-3 Returns and Form 26AS without examining whether the difference was because of any exemption or abatement.
During the exercise carried out by the department for unearthing of service tax evasion on the basis of third party data for the financial year 2015-16 (as received from the Income Tax Department) it was observed that in the year 2015-16 the appellant showed the sales/gross receipt (value of ITR) from service tax as Rs. 15,46,331 whereas the value of service provided (service tax value) was shown nil by giving arise to difference value of Rs. 15,46,331/-. It appeared to the department that the entire amount received by the appellant was towards providing taxable services and were chargeable to service tax liability under Section 66B of the Finance Act, 1994.
Hence the Show Cause Notice was served upon the appellant proposing recovery of service tax amounting to Rs. 2,24,217 along with interest and penalty under Section 77(1)(e) and Section 78 of the Finance Act, 1994 for the Act.
The appellant submitted that the adjudicating authorities below have wrongly confirmed the demand of service tax on expenses reimbursed to the appellant on the actual basis. The reimbursement of expenses incurred as a pure agent has been wrongly denied alleging non-submission of documents. Factually all the documents were submitted along with submissions. It is further submitted that SSI exemption was not extended by wrongly holding that supporting documents for previous year were not provided whereas all the documents were annexed along with appeal memo.
The department contended that the earlier appellant had not submitted any relevant document to prove that they were acting as pure agents. Going through sample invoices, relevant page of contract copy showing reimbursement of photocopy charges on actual but maximum of Rs. 200/- and bill of photocopy showing same bills on the name of Rajendra Dongle as well as their service receiver New India Insurance submitted with this appeal and TDS entry showing said amount under the head 194J (which is for fees for professional services) it is rightly held that appellant did not act a pure agent.
The tribunal held that the extended period is wrongly invoked by the department while issuing the show cause notice. Since the entire period of demand is beyond the period of limitation, the show cause notice is, therefore, held to be barred by time. Confirmation of proposal of such Show Cause Notice is liable to be set aside.
Case Details
Case Title: M/s Rajendra Dongle Versus The Principal Commissioner, CGST, Customs & Central Excise, Indore
Case No.: Service Tax Appeal No. 51778 of 2024
Date: 17/10/2025
Counsel For Appellant: Krishan Garg, Chartered Accountant
Counsel For Respondent: Rohit Issar, Authorized Representative
