No Service Tax Liability demandable only by calculating value without Examination of Activities and Transactions: CESTAT [Read Order]

The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the service tax liability cannot be demandable only by calculating value without examination of activities and transactions. 

Umesh Tilak Yadav, the appellant assessee was a professional player of cricket and registered with Service Tax. On 26.06.2020, the assessee was issued with a show cause notice. It was stated in the said show cause notice that for the year 2014-15, there was a difference of Rs.1,97,71,881/- between the returns filed by the appellant as income shown in Income Tax Returns (ITR) and the value of service shown in Service Tax (ST) returns for the same period. 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the service tax of Rs.24,43,804/- was demanded and proposals were made for imposing penalties under various sections. 

Mahesh Raichandani, the counsel for the assessee contended that the entire demand was based on differences in Service Tax (ST) returns and income tax returns and that the demand was raised without examination of the books of accounts and, therefore, the demand was bad in law. 

Badhe Piyush Barasu, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was liable for the demand raised by the revenue. 

The Bench observed that it is essential to establish that the value on which such service tax is calculated is the value under Section 67 of the Finance Act,1994, and the same was derived from the consideration received by the assessee out of the activity which had to satisfy the definition of service under sub-section (44) of Section 65B of Finance Act. 

The two-member bench comprising Anil G Shakkarwar (Judicial) and Suvenda Kumar Pati (Technical) held that the assessee had received the consideration by providing service that was missing in the show cause notice and was not liable for the demand raised by the revenue. 

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