The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, has set aside a service tax demand of ₹2.31 crore after finding that the department had issued multiple show-cause notices concerning the same PAN and attributed the entire amount reflected in Form 26AS separately to three service tax registrations without verifying the activities or receipts connected with each registered premises.
The Bench of P.A. Augustian (Judicial Member) and Sanjiv Srivastava (Technical Member) observed that proceedings based on the same information had already been considered in two earlier adjudication orders, in which the corresponding demands were dropped. Taking note of those orders and the absence of any proper correlation of the receipts with the appellant’s activities, the Tribunal held that the order confirming the demand had no merit.
Buy Now: 150 + Judgments On GST – E-Compilation For August 2026
The proceedings originated from information received by the department from the Directorate General of Analytics and Risk Management (DGARM). The information indicated a difference between the value of services appearing in the taxpayer’s Form 26AS and the value declared in the service tax returns for the financial year 2016-17.
According to the department, Form 26AS reflected receipts of ₹15,39,53,290 under Section 194C of the Income Tax Act. The department alleged that the corresponding receipts had not been reported in the ST-3 returns and that service tax had not been discharged on the amount.
The appellant was asked to furnish income tax returns, Form 26AS, balance sheets, reconciliation statements and supporting documents for the relevant period. The department stated that no response or supporting documents were submitted.
Consequently, a show-cause notice dated October 22, 2021, proposed recovery of service tax amounting to ₹2,30,92,994 for the financial year 2016-17. The notice also proposed interest and penalties under the Finance Act, 1994.
The adjudicating authority subsequently confirmed the entire service tax demand under the proviso to Section 73(1) of the Finance Act, 1994, read with Section 174(2) of the Central Goods and Services Tax Act, 2017. Interest was ordered to be recovered under Section 75.
A penalty equal to the tax demand—₹2,30,92,994—was imposed under Section 78 of the Finance Act. Separate penalties of ₹10,000 each were also imposed under Sections 77(1)(c) and 77(2).
Before the Tribunal, the appellant submitted that show-cause notices involving the same issue and period had already been adjudicated. Those proceedings had been dropped through orders dated January 28, 2022, and May 27, 2022.
It was argued that the impugned proceeding was effectively the third show-cause notice issued on the same factual basis. According to the appellant, once the authorities had already considered and dropped the demand arising from the same Form 26AS information, another order confirming the identical demand with penalties could not be sustained.
The departmental representative, on the other hand, supported and reiterated the findings recorded by the adjudicating authority.
On examining the records, the Tribunal found that the person holding PAN AIEPB0927D had three separate service tax registrations. One registration was in the name of Ram Kishan Bairwa at Indirapuram, Ghaziabad, while the other two were in the name of Vishal Associates at addresses in Ghaziabad and Noida.
The registrations identified by the Tribunal were:
- AIEPB0927DST001 in the name of Ram Kishan Bairwa at Indirapuram, Ghaziabad;
- AIEPB0927DST002 in the name of Vishal Associates at Khora Colony, Ghaziabad; and
- AIEPB0927DST003 in the name of Vishal Associates at Sector 56, Noida.
The Tribunal observed that the information received from the Income Tax Department related to the common PAN. However, the same information was processed simultaneously against all three service tax registrations.
As a result, separate demands were raised against each registered person or premises by treating the entire Form 26AS amount of ₹15,39,53,290 as undeclared receipts in the ST-3 return of each registration.
“It is not understood how, so many show cause notices were issued to the same PAN Number in respect of the three registered premises separately,” the Tribunal observed.
The Bench further noted that the demands in all three cases had been raised without conducting any verification, even though the appellant was a registered service provider.
The Tribunal referred to an order dated January 28, 2022, passed by the Principal Commissioner of CGST, Noida, concerning Vishal Associates and service tax registration AIEPB0927DST003.
Those proceedings covered both financial years 2015-16 and 2016-17. For 2016-17, the difference between the figures reflected in the income tax records or Form 26AS and the service tax return was the same ₹15,39,53,290 involved in the appeal before the Tribunal.
The service tax calculated for 2016-17 was also ₹2,30,92,994. The Principal Commissioner, however, dropped the proceedings initiated through the show-cause notice dated April 27, 2021.
The Tribunal also examined another order dated May 27, 2022, relating to service tax registration AIEPB0927DST002.
In that proceeding, Vishal Associates explained that it had surrendered the registration on February 4, 2015, after shifting to Noida, where it obtained a new registration and regularly paid tax and filed returns.
The Commissioner found that the demand related to financial year 2016-17, during which the assessee had already ceased to fall within the jurisdiction of the concerned Ghaziabad Commissionerate.
The Commissioner also recorded that the same period and the same difference between Form 26AS and the service tax return were already covered by the Noida order dated January 28, 2022. Accordingly, the second set of proceedings was also dropped.
The Tribunal emphasised that the three show-cause notices were issued without correlating the receipts appearing in Form 26AS with the activities carried out from any particular registered premises.
Merely because the registrations were linked to the same PAN, the entire amount reported in Form 26AS could not be attributed separately to every registration without first verifying the underlying transactions and determining the registration or premises to which the receipts actually related.
The Bench found it evident from the two earlier adjudication orders that the same issue and the same information had already been examined separately by the authorities. In both proceedings, the demands were dropped.
“Taking the note of the two orders dropping the demand raised on the basis of same information, we do not find any merits in the impugned order confirming the demand,” the Tribunal held.
The Bench added that this conclusion was further supported by the fact that all three notices had been issued without correlating the receipts with any activity undertaken by the appellant from the respective registered premises.
The CESTAT allowed the appeal and set aside the ₹2.31 crore service tax demand along with the consequential interest and penalties.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
