Demand of Service Tax Based on Audit Report of IOCL and Income Tax Department’s Information from Form 26AS is not Valid: CESTAT [Read Order]

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal( CESTAT) has held that the demand for service tax based on the audit report of Indian Oil Corporation Ltd(IOCL) which is a third party and income tax department’s information from Form 26as is not valid.
M/s. M K Enterprise, the appellant challenged the Order passed by the Commissioner, CGST & CX, Patna covering the period from October 2011 to March 2016. The Appellant is engaged in providing services to Indian Oil Corporation Ltd (“IOCL”) and such services are ‘taxable services’ under Chapter V of the Finance Act, 1994 under the category ‘Works Contract Service’, ‘Maintenance & Repair Service’, ‘Manpower Recruitment/Supply Service’ and ‘Cleaning Service’.
It was the case of the Service Tax department thaft the Appellants have not filed their ST-3 returns on time and have not paid Service Tax on the entire consideration received from IOCL for the period impugned in the current proceeding.
The Show Cause Notice was issued to the Appellant seeking payment of Service Tax on the entire value received from IOCL as per Form 26AS and the Balance sheet for the impugned period by applying the highest rate of Service Tax and without describing the nature of services provided by the Appellant as well as without considering the payments made by the Appellant as service tax for the said period and by invoking extended period of limitation by alleging suppression of facts by the Appellant.
It was also stated that the Appellant was entitled to abatement on various services such as GTA, works contract etc. which has not been considered by the department. It was further stated that the entire demand is barred by limitation as for the period 2010-11 and 2011-12 on the self-same issue, a Show Cause Notice dated 22.05.2015 was issued by invoking an extended period of limitation which culminated into a demand order dated 23.08.2016 and in the first appeal.
The Appellant had stated during arguments that the entire demand was confirmed by the Department based on the audit report of the IOCL which is third-party information and the Income Tax Department’s information viz. form 26AS of the Appellant. The entire mechanism adopted by the Department to confirm the demand is incorrect and unreasonable.
A two-member bench comprising Shri P K Choudhary, Member(Judicial) and Shri K Anpazhakan, Member(Technical) observed that the department has grossly erred in not taking into account the payments made by the Appellant as well as submissions for the provision of services having abatement as well as falling under reverse charge mechanism.
Further viewed that the Chartered Accountant’s certificate that the entire value as per form 26AS has suffered tax to the extent of supplies taxable under forward charge and only GTA services provided by the Appellant has not suffered tax at the hands of the Appellant as the recipient was liable to pay Service Tax on the same.
The Authorized Representative has not been able to make out a case that the services of works contract as provided by the Appellant are not allowed abatement as claimed by the Appellant or otherwise that such services were not provided by the Appellant.
While allowing the appeal, the CESTAT set aside the impugned order

To Read the full text of the Order CLICK HERE
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