In a recent decision, the New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that Form 26AS served as a reliable source to establish the commission taxable services and income therein.
The Appellant-Assessee Swatantra Jain had filed a Service Tax Appeal before the CESTAT seeking to assail the order-in-appeal passed by the Commissioner (Appeals), Indore wherein the order-in-original passed by the Assistant Commissioner was upheld.
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The Appellant functioned as a commission agent who received commission to sell plots of M/s DHL Infra Bulls International Pvt. Ltd. Section 65B (44) of the Finance Act, 19944 deems such activity of providing services of real estate agent under the definition of “service”, thereby subjecting the Appellant to wards unpaid service tax dues with interest and penalties therein.
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Consequently, show-cause-notices were issued for the period 2010-2011 to 2014-2015 and the proposals were confirmed via the order-in-original dated 30.11.2016.
Ashutosh Upadhyay, appearing for the Appellant submitted that DHL had deducted Tax Deducted at Source (TDS) for the services received which were not duly reflected in the Form 26AS.
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Furthermore, appellant’s income remained below the threshold limit of ₹10 lakhs prescribed under Notification Nos. 32/2012 and 33/2012-ST, and thus no service tax was payable. Furthermore, he argued that reliance on Form 26AS as the sole basis for determining tax liability was untenable without corroborative evidence.
Meanwhile, authorised representative for the revenue, Jaya Kumari asserted that in the absence of registration, returns, or any explanation to the contrary, Form 26AS served as a crucial and reliable source for determining the amount received as commission.
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She further emphasized that all entries in the Form related exclusively to services rendered to DHL, and the refund of TDS or subsequent income tax treatment was immaterial for determining service tax liability.
The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Member – Technical) observed that whether or not TDS was deducted from the payable amounts was immaterial to note, rather the key point of notice should be how much amount was paid by DHL to the appellant and if the appellant had been paid for rendering a taxable service or not.
On a specific query, the appellant counsel also submitted that the appellant had no other business activity during the relevant period, and that the amounts reflected in Form 26AS directly represented taxable consideration for agency services.
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While the Bench observed that Form 26AS alone cannot always form the basis of demand in all cases, in this instance it clearly evidenced taxable income in the absence of any rebuttal or contrary evidence.
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In light of all the observations, the Bench dismissed the appeal, ruling that the service tax demand was lawfully assessed and that the appellant’s claim for threshold exemption or proportional deduction could not be entertained without adequate supporting documentation.
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