In a recent ruling, the Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that a mere discrepancy between the trial balance and ST-3 Returns, without corroborative evidence, is insufficient to justify a service tax demand.
During the course of the audit, for the service tax filed for the period April 2015 to June 2017, the figures of ST-3 returns were compared with the ledger account balance appearing in the trial balance. The department found a difference between the two sets of figures, which indicated the value of taxable services on which the service tax was not paid by the appellant.
A show cause notice ( SCN ) dated 15.07.2020 was issued by the department demanding Rs. 52,92,65,538 for service tax on various services under the reverse charge mechanism and renting of property. The adjudicating authority confirmed Rs. 10,76,44,865 with interest and penalty.
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Aggrieved by the above order, the appellant has appealed before the CESTAT.
The counsel on behalf of the appellant contended that the demand was solely based on discrepancies between ledger accounts and ST-3 Returns, without assessing the nature of the ledger entries or verifying if they were for taxable services.
The counsel for the department reiterated the findings in the impugned order.
The CESTAT bench observed that it cannot be held that taxable services had been provided by the appellant merely by looking at the difference in figures appearing in the trial balance as compared to the ST-3 Returns without any corroborative evidence
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The CESTAT bench, comprising Mr. Binu Tamta ( Judicial Member ) and Mr. P V Subba Rao ( Technical Member ) allowed the appeal and set aside the impugned order.
The appellant was represented by Mr. Rajeev Agarwal and the respondent by Mr.Rajeev Kapoor.
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