Income Tax Returns cannot be Merely used to confirm Demand of Service tax by Invoking Extended Period of Limitation: CESTAT [Read Order]

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the income tax returns cannot be merely used to confirm the demand of service tax by invoking extended periods of Limitation. 

Verve Consulting Private Limited, the appellant assessee was engaged in providing services as a Management Consultant, and the assessee appealed against the order passed by the Commissioner for confirming the demand of service tax along with interest and penalty. 

Shreya Mundhra, the counsel for the assessee contended that the Services like software development provided by the assessee were exempt from payment of Service tax in terms of Notification. 

Further submitted that the department has not conducted any independent inquiry to ascertain the said amount was received towards the rendering of any taxable service. 

S.S.Chattopadhyay, the counsel for the department relied on the decisions made by the lower authorities and contended that the show cause notice was issued only based on the audit report and return without any independent inquiry. 

The Bench observed that it was a settled position of law that information derived from the Income tax returns cannot be merely used to confirm the demand for Service tax by invoking an extended period of limitation. 

The two-member bench comprising Ashok Jindal (Judicial) and K.Anpazhakan (Technical) quashed the demand raised by issuing a show cause notice while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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