Customs, Excise & Service Tax Appellate Tribunal, Kolkata: In an appeal filed against order of confirmation of the service tax demand by Commissioner (Appeals), K. Anpazhakan (Technical Member) stated that the demand confirmed in the order, solely relying on the data received from Central Board of Direct Taxes (CBDT), without adducing corroborative evidence in support, could not be sustained. Such mechanical reliance on income tax data, without verification of the nature of receipts of proof of taxable services rendered, was impermissible in law. Thus, the Tribunal set aside the impugned order.
Background:
The appellant-Tabassum Enterprise was engaged in the business of providing service of arranging goods transportation. The appellant did not issue consignment notes but had taken registration with the Department under the category of Goods Transport Agency Service. The information received from CBDT revealed that the value of ‘Sale of Service’ in Income Tax Return shown to them was Rs. 51,47,648 and Rs. 94,10,352 for the Financial Years 2015-16 and 2016-17 respectively. For the period from April 2017 to June 2017, the Department did not have any taxable value on pro-rata basis. Thus, the gross value declared for the entire financial year 2017-18 has been taken into account as the taxable value for the three months from April 2017 to June 2017.
However, the officers observed that in the ST-3 Returns for service tax, filed by the appellant during the relevant period, their gross taxable value was shown as NIL. The department had considered the gross value declared in the Income Tax Returns as the value of taxable for the period 2015-16 to June and calculated the gross suppressed taxable value as Rs. 1,69,10,588.
A Show Cause Notice was issued to the appellant demanding service tax of Rs. 25, 10, 850 along with interest and equal amount of penalty under Section 78 of the Finance Act, 1994 (‘Finance Act’). The Adjudication Authority confirmed the demand of service tax. The Commissioner (Appeals) did not confirm the calculation on pro-rata basis and confirmed the service tax demand to the extent of Rs. 21,57,962. Thus, the current filed by the appellant challenging order of Commissioner (Appeals).
Analysis, Law and Decision:
The Tribunal observed that the present demand had been raised and confirmed based on data provided by CBDT and the demand was confirmed without the support of any independent or corroborative evidence from the Service Tax records. Such mechanical reliance on Income Tax data, without verification of the nature of receipts of proof of taxable services rendered, was impermissible in law. The Tribunal further observed that mere entries in income tax returns or Form 26AS could not establish liability under the Finance Act, unless corroborated by evidence demonstrating rendition of taxable service. The Tribunal relied on Indian Machine Tools Manufacturers Assn. v. CCE, 2023 SCC OnLine CESTAT 769 and held that demand of service tax confirmed in the impugned order, solely relying on the data received from CBDT, without adducing corroborative evidence in support, could not be sustained, thus, liable to be set aside. The Tribunal noted that the appellant was rendering service of arranging transportation of goods and they did not issue any consignment note. The Tribunal observed that service of transportation of goods by road was liable to service tax under category Goods Transport Agency Service, only when the service provider issues ‘consignment notes’. Further, since the appellant had not issued any ‘consignment notes’, thus, the service rendered by them were clearly excluded, as it was covered in the ‘Negative list’ Entry under Section 66-D(P)(i)(A) of the Finance Act. The Tribunal relied on CCE v. Chartered Logistics Ltd., (2024) 128 GSTR 400 and held that the demand confirmed in the impugned order was not sustainable.
Regarding the invocation of extended period of limitation to confirm demand, the Tribunal observed that the demand was raised and confirmed in the impugned order based on data received from CBDT which were always available with the department. Therefore, the Tribunal observed that suppression of the facts with intention to evade tax was not established. The Tribunal held that extended period could not be invoked in the case and the demand confirmed by invoking extended period of limitation was not sustainable. Thus, the Tribunal allowed the appeal and set aside the impugned order.
[Tabassum Enterprises v. Commr. (CGST), Service Tax Appeal No.75037 of 2025, decided on 19-9-2025]
Advocates who appeared in this case:
For Appellant(s): Aditya Dutta, Advocate
For Respondent(s): S. K. Jha, Authorised Representative