Bank Credits and Admitted Receipts Can Be Treated as Taxable Service Value in Security Services Case: CESTAT

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that bank credits and receipts admitted by an assessee can be treated as taxable value for service tax purposes, even when the assessee claims that such amounts include non-service-related transactions. The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) upheld a service tax demand of ₹1.97 crore, along with interest and penalties, against the security services company, granting only limited relief by allowing recomputation of tax liability after extending the cum-tax benefit. The appellant/assessee, PNG Detective & Security Pvt. Ltd. was registered under the category of Security Agency Services. Following an investigation based on intelligence inputs, the department alleged that the company had suppressed the value of taxable services and failed to pay service tax on the full consideration received during the period from 2006–07 to 2011–12. The department further alleged that the company was also engaged in manpower supply services, which are independently taxable, without obtaining the required registration or paying service tax under that category. An earlier adjudication order confirming the demand was set aside by CESTAT in 2016 on grounds of violation of natural justice, and the matter was remanded for fresh adjudication. The present appeal challenged the subsequent order passed by the Commissioner in May 2017 confirming the demand. The appellant argued that the service tax demand was based on presumptions, primarily relying on bank statements. It was contended that bank deposits included amounts such as re-deposit of withdrawn cash, bounced cheques, loans, fund transfers, and statutory payments like salaries, EPF, ESI, and bonuses, which could not be treated as consideration for taxable services. The company also submitted that only the service charge component reflected in invoices was liable to service tax and that the adjudicating authority failed to properly consider detailed submissions made after the Tribunal’s remand. It was further argued that the demand was time-barred, as the appellant was registered and filing returns, and the department was aware of its activities. The department relied heavily on statements recorded from the Managing Director, who had admitted the correctness of the computation of service tax liability and accepted that the amounts reflected in annexures represented receipts from services provided by the company. The department also relied on documents recovered from a computer during investigation, Income Tax Returns, bank statements, and ledger confirmations from service recipients. According to the Revenue, these records established that the appellant had received substantial consideration for taxable services, including manpower supply, without discharging the corresponding service tax. The Tribunal held that bank credits, when supported by corroborative evidence and admissions, can validly form the basis for determining taxable value. It noted that the recovered electronic documents were obtained in the presence of the Managing Director and independent witnesses, and that the Managing Director had signed and accepted the annexures showing service receipts and tax liability. Importantly, the Tribunal emphasized that admissions made during investigation and not subsequently retracted carry strong evidentiary value, applying the settled principle that facts admitted need not be proved. On the plea that bank deposits included non-taxable entries, the Tribunal observed that the appellant failed to produce any reconciliation or documentary evidence to substantiate such claims. In contrast, the department had corroborated its findings with Income Tax data and confirmations from service recipients. CESTAT upheld the invocation of the extended period of limitation, noting that the appellant failed to obtain proper registration for manpower supply services and did not comply with statutory filing requirements. The Tribunal found sufficient evidence of suppression and non-disclosure to justify extended limitations and penalties. While sustaining the demand on merits, the Tribunal allowed the appellant the benefit of cum-tax, holding that where service tax was not collected separately from clients, the gross receipts must be treated as inclusive of service tax. The matter was remanded to the adjudicating authority only for limited recomputation of the demand after extending this benefit. Case Details Case Title: M/s. PNG Detective & Security Pvt. Ltd. Versus Commissioner Case No.: Service Tax Appeal No. 51402 Of 2017 Date: 02.02.2026 Counsel For Appellant: Alok Yadav, Advocate Counsel For Respondent: Jaya Kumari, Authorised Representative Click Here To Read Order Read More: JurisHour | Tax Law Daily Bulletin : February 3, 2026

Bank Credits and Admitted Receipts Can Be Treated as Taxable Service Value in Security Services Case: CESTAT

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