Service Tax not leviable on Demand confirmed on basis of Difference between Figures of ST-3 Returns and Balance Sheets: CESTAT [Read Order]

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that service tax is not leviable on the demand confirmed on the basis of difference between figures of ST-3 Returns and balance sheets.

The appellants, M/s Indian Machine Tools Manufacturers Association (IMTMA), are a society registered under Societies Registration Act, 1946 and Indian Companies Act, 1956; the appellants are registered as a service tax assessee under the category of “Business Exhibition Services”, “Sponsorship Services”, “Renting of Immovable Property Service” and “Scientific and Technical Consultancy Services”.

The Department issued a show-cause notice to the appellants demanding service tax Rs.76,57,325/- under the Head “Business Exhibition Service” on the basis of difference between ST-3 Returns and balance sheet; Rs.2,82,54,686/- on the basis of difference between ST-3 Returns and balance sheet under the Head “Renting of Immovable Property Service”.

The counsel for the appellant submitted that no demand can be raised on account of difference between the figures reflected in ST-3 Returns and balance sheet and that extended period is not invokable in the case as all the facts are available in the financial records of the company and as such, there was no positive act of suppression, mis-statement, mis-representation etc. on the part of the appellants with an intent to evade payment of service tax.

The Departmental Representative reiterated the findings of the impugned order.

A Two-Member Bench comprising SS Garg, Judicial Member and P Anjani Kumar, Technical Member observed that “We find that it is a settled principle of law that service tax can be levied only when there is a clear identification of service provider, service recipient and consideration paid for the same. In the absence of any such evidence of the service recipient and the service provided, service tax cannot be demanded and confirmed.”

“For this reason, we are of the considered opinion that it is not open for the Department to raise demands on the basis of other statutory returns like Income Tax Returns or balance sheets without proving that such service has been rendered by the assessee and consideration thereof has been received. Similarly, no service tax demand can be raised and confirmed on the basis of notional income.”

To Read the full text of the Order CLICK HERE

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