Income Tax Data Alone Not Sufficient To Demand Service Tax: CESTAT
Tribunal rules department failed to prove suppression, show cause notice held time-barred.
The Delhi Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that merely relying on data from Form 26AS (Income Tax) without corroborating evidence was not sufficient to establish service tax liability.
The bench of Dr. Rachna Gupta (Member-Judicial), quashed the demand originally raised via a Show Cause Notice dated July 30, 2021. The Tribunal held that the notice was barred by limitation and that there was no evidence of deliberate suppression or fraud by the company.
The dispute arose after a departmental audit flagged discrepancies between the company’s income declared in ST-3 returns and its financial records for services related to Erection, Commissioning and Installation (ECIS) and Maintenance or Repair Services (MRS). Based on this, the department issued a demand of ₹25.66 lakh in service tax along with interest and penalties.
The Commissioner (Appeals), CGST Indore, had upheld the demand, prompting the company to appeal to the Tribunal.
The Tribunal observed that the company had disclosed all relevant financial data in its records and returns filed in July 2019, thus negating any allegation of suppression or fraud.
The Tribunal cited previous judgments that held assumptions based on 26AS without thorough examination cannot form the sole basis for a demand.
The Tribunal noted the misuse of the extended limitation period under the Finance Act, 1994, holding that the show cause notice was time-barred as there was no willful misstatement or suppression by the appellant.
Case Details
Case Title: M/s Shree Ganesh Telecom Pvt. Ltd. Versus Commissioner (Appeals), Central Goods & Service Tax & Central Excise, Indore
Case No.: Service Tax Appeal No. 50211 of 2024
Date: 02/07/2025
Counsel For Appellant: Pankaj Sethi, Chartered Accountant
Counsel For Respondent: Anuj Kumar Neeraj, Authorized Representative
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
