Custom, Excise & Service Tax Tribunal
Shri Ravindra Kumar Hasankar vs Belagavi Commissionerate on 3 April, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 3
Service Tax Appeal No. 20186 Of 2023
[Arising out of Order-in-Original No. BEL-EXCUS-000-GLB-DIV-COMMR-MG-
26/2022-23-ST-dated 19.01.2023 passed by the Principal Commissioner of Central
Goods, Service Tax and Central Excise, Belagavi]
Shri Ravindra Kumar Hasankar : Appellant
No. 66 Priya Nivas Bank Colony
Kumbarwada Road Bidar Karnataka-585402
Vs
Commissioner of Central Tax : Respondent
Belagavi Commissionerate APPEARANCE:
Mr. Prakash, Advocate for the Appellant Mr. Sanjay Venkat and Mr. Rajesh Shastry, (Superintendents) Authorized Representative for the Respondent CORAM :
HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) FINAL ORDER No. 20447/2025 Date of Hearing:28.02.2025 Date of Decision:03.04.2025 HEMAMBIKA R. PRIYA The present appeal has been filed by Shri Ravindra Kumar Hasankar1 to assail the order-in-original dated 19.01.2023 wherein the Commissioner has confirmed the demand of Rs. 4,87,597/- along with interest and imposed appropriate penalties.
2. The brief facts of the case are that the appellant is a sub- contractor who undertakes civil works of the State Government & Central Government from the Main Contractor. The department gathered intelligence from the data received from CBDT through 1 the appellant 2 Service Tax Appeal No. 20186 Of 2023 Income Tax Return for FY 2015-16 and FY 2016-17 and on completion of investigation, the department issued show cause notice in C. No. V/SER/15/20/2021 ST Adjn/788 DIN-20210457TC0000222C11 and SCN SI No 08/2021 dated 19.04.2021 proposing to demand service tax of Rs. 2,01,43,820/- for the period from 2015-16 to 2016-17 under the category of Works Contract Services and other Services by invoking proviso to section 73(1) of the Finance Act, 1994 and impose interest under section 75, and penalty under section 77(1), 77(2) and 78 of the Act. The same was adjudicated and the demand of Rs.4,87,597 was confirmed. The demand of Rs. 1,96,56,223/- was dropped. Penalty under section 77(1) and 77(2) and 78 of the Finance Act, 1994 was imposed. Aggrieved by the said order, the appellant has filed the present appeal.
3. Learned counsel for the appellant submitted that the demand is based on Form 26AS/ third party data. The courts in catena of decisions has held that Service tax demand cannot be based on third party data. Ld. Counsel relied on the following decisions:
Rishu Enterprises v. Commissioner of CGST & Excise, Dibrugarh2 Gopichenna vs. Commissioner of Central Tax, Medchal 3 Indian Machine Tools and Manufacturing Association vs. CCE, Panchkula 4 Ld. Counsel contended that the entire proceedings has been carried out on the basis of information available in Form 26AS. Since these figures are included in the Profit/Loss Account in the Balance Sheet, which is a public document and so there can be no suppression.
2 2024-TIOL-157-CESTAT-KOLKATA 3 Final Order No. A/30078-30079/2024
4 2023 (11) CENTAX 213 (9) (Tri.-Chan.) 3 Service Tax Appeal No. 20186 Of 2023 Moreover, the Department had not adduced any positive evidence to show malafide intention or mens rea for evasion of Service Tax, under any particular head of Taxable Services. Since none of the ingredients necessary for invoking extended period of limitation as visualized under proviso to Sec. 73(1) of the Act exists in this case, the demand confirmed in the impugned order by invoking extended period of limitation is not sustainable.
3.2 Ld. Counsel further submitted that the findings by the Ld. Adjudicating Authority is beyond the show cause notice as the show cause notice has neither discussed about the nature of service or the deficit stamp duty in show cause notice. The impugned order raising the finding in the adjudication stage clearly evidences that the show cause notice was issued without any specific allegation regarding provision of service. The impugned order is therefore liable to be set aside on this ground alone. In support of his submission, ld. Counsel relied upon the following decisions:-
Shubham Electricals Vs. Commissioner of C. Ex. and ST, Rohtak 5 Indo Nippon Chemicals Co. Limited vs. Commissioner of Central Excise, Vadodara6 He further submitted that neither the show cause notice dated 19.04.2021 nor the impugned order dated 29.12.2022 record any assertion/conclusion whatsoever as to which particular or specific taxable service the appellant had provided. In the absence of an allegation of having provided a specific taxable service in the show cause notice and in view of the fallure in the adjudication order as 5 2015 (40) STR 1034 (Tri.-Del.) 6 2009 (16) STR 639 4 Service Tax Appeal No. 20186 Of 2023 well, neither the show cause notice nor the consequent adjudication order could be sustained. He also submitted that the demand in the impugned order was confirmed on the basis of a presumption. Service tax can be levied only on a concrete service transaction and cannot be imposed merely on the basis of assumption as was held in SOTC Travels Services Pvt. Ltd. vs. Commissioner of Central Excise7.
3.3 Ld. Counsel further stated that the mere terms and conditions of notification prescribing evidencing appropriate stamp duty was intended to authenticate the date on which the contract had been entered into. No other purpose would be served insofar as the legislative enactment. He relied upon the decision of the Tribunal in the case of Rare Townships Pvt. Ltd. Vs. Commissioner of CGST and Central Excise, Navi Mumbai8. Ld. Counsel stated that the contract is held to be under stamped, the substantial benefit of exemption notification cannot be denied on mere procedural lapse as the under stamping would be the fault of the main contractor. Further, ld.
Counsel stated that the appellant had no part in such deficit payment. It is a settled position of law that the exemption notification should be construed strictly as per the wording of the notification. However, there is an exception if the exemption notification is a beneficial exemption having their purpose as encouragement or promotion of certain activities, then it should be liberally. He placed on the deicison in the case of Government of Kerala v. Mother Superior Adoration Convent. Since, the notification is on the government contracts with respect to roads, religions (tourism centers), drainages etc, the 7 ST/50045/2016 (Tri.-Del.) 8 Final Order No. 85856 of 2024 dt. 14.08.2024 5 Service Tax Appeal No. 20186 Of 2023 exemption enshrined under Sl. No 12A(a) has to be considered as a beneficial exemption and not general exemption.
4. Learned Authorized Representative for the Department submitted that the Proof of Agreements being entered into before the prescribed Date, w.r.t. Entry No. of 12A of Notification No. 25/2012- ST dtd. 20/06/2012 was not furnished. Ld. AR stated that there was Proof of Payment of appropriate Stamp duty, being paid before the said date. He submitted that the date signing of the contract by main contractor was 17/07/2013 whereas the Stamp Duty was paid on 11th Nov 2013 on Rs. 100/- Stamp Paper instead of appropriate Valued Stamp Paper. In terms of Entry 5(h)(id) of Karnataka Stamp Act 1957, the value of prescribed stamp duty was as follows:-
(id) if relating to building works or labour or services (works contracts)
(i) Where the Rupees One Hundred amount/consideration in the agreement does not exceeds Rs. 10 lacs
(ii) Where the Rupees One Hundered and in amount/consideration in the addition Rupees One Hundred for agreement does exceeds Rs. every Rupees 10 lacs or part 10 lacs thereof in excess of Rupees 10 lac, subject to maximum of Rs. 5 lacs Ld. AR submitted that as appropriate stamp duty was not paid by the appellant. Therefore, the condition of the notification had not been fulfilled on this context, ld. AR relied on the judgement passed in the case of Commissioner Of Customs (Import), Mumbai vs M/S. Dilip Kumar And Company9.
9 30 July, 2018- AIRONLINE 2018 SC 7 6 Service Tax Appeal No. 20186 Of 2023
5. We have heard the Learned Counsel for the appellant and the Learned AR for the Department and perused the case records.
6. I have gone through the facts of the case. The issue is no more res-integra. This Tribunal has consistently held that merely based on 26AS statement, Service tax cannot be demanded. For service tax demanded to be upheld, there has to be evidence of provision of service, its nature of service etc. This requirement has not been satisfied by the Department. This Tribunal has, in several decisions, held that such demands cannot be sustained, merely on the basis of Form 26AS. In the case of M/s Gopichenna vs. Commissioner of Central Tax, Medchal10, this Tribunal observed as under:-
"8. I find that Tribunal has been continuously holding that such demands are not sustainable. I find that Chandigarh Bench of this Tribunal in the case of Indian Machine Tools Manufacturers Association Vs. CCE, Panchkula (supra) held as follows:
"11. Coming to third and final issue as to whether any demand can be sustained on the basis of difference between the figures of ST-3 Returns and the balance sheets, 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. We find that Tribunal in the case of Synergy Audio Visual Workshop (P) Ltd. -2008 (10) STR 578 (Tri- Bang.) held that:
5.1 The other ground for confirming demands is that the appellants had shown certain amounts due from the parties in their Income-tax returns and Revenue has proceeded to demand service tax on this amount shown in the Balance Sheet. The appellants have relied on large number of judgments which has settled the issue that amounts shown in the Income-tax returns or Balance Sheet are not liable for service tax. In view of these judgments, the appellant 10 Final Order No. A/30078-30079/2024 7 Service Tax Appeal No. 20186 Of 2023 succeeds on this ground also. The Impugned order is set aside and the appeal is allowed."
8.1 Also the Tribunal in the case of M/s Raj Mohan Vs. Commissioner of CGST, Panchkula (supra), held as follows:
"3. I have heard learned Counsel for the appellant and learned Authorised Representative for the Revenue and perused the case records including the written submissions and case laws filed by the respective sides. Learned Counsel for the appellant submits that on merits as well as on limitation no Service Tax can be demanded from the appellant. Per Contra, learned Authorised Representative re- iterated the submissions recorder in the Impugned order and prays for dismissal of appeal filed by the appellant. So far as the issue about differences in the figures reflected in ST-3 Returns and in form 26AS is concerned it has been settled by way of various decisions of the Tribunal that the Revenue cannot raise the demand on the basis of merely differences without establishing that the entire amount received by the appellant as reflected in form 26AS is consideration for services provided because it is also not proper to presume that the entire differential amount was on account of consideration for providing services without verifying it. It is the specific case of the appellant that the amount shown in Form 26AS by the service recipient have not been received by the appellant. I also agree with the submission of learned Counsel that the burden to prove the allegations is upon the department that the appellants have received the extra payment on which the TDS of Rs.3,74,121/-(since form 26AS reflects TDS) has been deducted by the service recipient. My aforesaid view is also supported by the decision of the Tribunal in the matter of Qwest Engineering Consultant Pvt. Ltd. v/s Commissioner CGST, Central Ex. Allahabad; 2022 (58) GSTL-345 (Tri-All.) in which the co-ordinate Bench of the Tribunal has held that form 26AS is not a statutory document for determining the taxable turnover under the Service Tax as form 26AS is maintained on cash/receipt basis by the Income Tax department for the purpose of TDS etc. whereas the Service Tax is chargeable on mercantile basis (approval basis) on the services provided. Similarly, in the matter of Kush Construction v/s CGST Nachin, ZTI, Kanpur;2019 (24) GSTL-606 (Tri-All.) also it has been held that differences in figures reflected in ST-3 Returns and form 26AS cannot be basis for raising Service Tax demand without examining the reasons for such differences and without examining whether the amount as reflected in the said Income Tax Return was the consideration for providing any taxable services or the difference was due to any exemption or any abatement. Even otherwise in various decisions of the Tribunal it has been held that the figures in form 26AS are already included in Income Tax Returns in the Profit & Loss account and balance sheet which is a public document and the ST-3 Returns were also filed by the appellants regularly therefore, no suppression can be alleged and no evidence has been adduced by the Revenue to establish melafide intention for evasion of Service Tax and therefore extended period cannot be invoked. The recent decision of the Tribunal on this issue of extended period in such type of cases is by the Kolkata Bench of the Tribunal vide order dated 8 Service Tax Appeal No. 20186 Of 2023 23/02/2022 in the matter of Service Tax Appeal No. 75792 of 2021 titled as M/s. Luit Developers Pvt. Ltd. v/s.
Commissioner CGST & Central Excise, Dibrugarh. So far as the demand of Rs. 38,357/- based on four invoices is concerned, I am unable to find any document in the case records in support of appellant. The appellant has failed to adduce any evidence/document in support of their claim that the said amount has not been received by them or that the invoices/bills were cancelled. Rather it has been submitted by the learned Counsel that the appellant has made a submission before the lower authorities that they were ready to pay the service tax amount involved on the said invoices in order to avoid the interest liability and in the written submission herein it has been mentioned by the appellant that the service tax has been deposited by them. Therefore accordingly this issue is decided against the appellant."
7. Similarly, in the case of M/s Indian Machine Tools Manufacturers Association vs. CCE, Panchkula11, the Tribunal held as under:-
"11. Coming to third and final issue as to whether any demand can be sustained on the basis of difference between the figures of ST-3 Returns and the balance sheets, we find 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. We find that Tribunal in the case of Synergy Audio Visual Workshop (P) Ltd. 2008 (10) STR 578 (Tri. Bang.) held that:
"5.1 The other ground is for confirming demands is that the appellants had shown certain amounts due from the parties in their Income Tax returns and Revenue has proceeded to demand Service Tax on this amount shown in the Balance Sheet. The appellants have relied on large number of judgments which has settled the issue that amounts shown in the Income Tax returns or Balance Sheet are not liable for Service Tax. In view of these judgments, the appellant succeeds on this ground also. The impugned order is set aside and the appeal is allowed."
11 2023 (11) CENTAX 213 (9) (Tri.-Chan.) 9 Service Tax Appeal No. 20186 Of 2023
12. We also find that Tribunal in the case of Indian Oil Corporation- 2020 (32) GSTL 350 (Tri. Kolkata) held that:
8. Having heard both the sides, we are of the view that the entire operation of transportation of the crude from Haldia port to BRPL is covered by a single contract. The terminal facilities are only intermediate operation of the transportation of the goods through pipeline. Since, the requisite amount of the service tax has already been paid on the service of transportation through pipeline provided by the respective parties, we feel that the terminal facilities being the integral part of the entire pipeline facilitating the transportation of the liquid crude, it will not be legally correct to consider the terminal facilities as independent facilities for which no real transaction of service charges have actually taken place and therefore demanding a service tax on the notional value taken by the appellant only for the purpose of accounting of the cost of the different units working under the appellants, will be not in the interest of the service tax law. Since, service tax has already been paid on the entire amounts which have been charged for transportation of the crude through pipeline, we thing that charging service tax separately for the terminal facilities is legally not sustainable.
13. In view of above, we find that the impugned order cannot be sustained and is liable to be set-aside. We do so and allow the same."
8. In the case of M/s Lord Krishna Real Infra Private Limited vs. Commissioner of Customs, Central Excise and Service Tax, Noida12, the Tribunal observed as follows:-
"We also note that there were no other record of the appellant which were taken into consideration for entertaining a prima-facie view that appellant was required to pay short paid service tax of around Rs.8 crores for the said period than the information that was available in returns in the form 26AS. In this regard we note that this Tribunal had an occasion to examine sustainability of demand raised only on the basis of form 26AS. It was held by this Tribunal in the case of Sharma Fabricators Pvt. Ltd. Vs Commissioner of Central Excise, Allahabad reported at 2017 (5) GSTL 96 (Tri.-All.) as follows:-
"3.Heard the ld. Counsel for M/s. Sharma he has basically argued that the said Show Cause Notices were not issued by examining the books of account maintained by M/s. Sharma. The Show Cause Notices were based on the presumptions and third party information. He has argued that even when the payments were not made by the clients but the clients booked the expenditure in their books of account they were required to pay the related tax deducted at source to the 12 Final Order No. 70126 of 2019 dated 27.12.2018 (Tri.-Allah.) 10 Service Tax Appeal No. 20186 Of 2023 exchequer and issue a certificate of TDS and incorporate the same in the return called 26AS filed with the Income Tax Authorities and such information cannot be the basis for arrival of the consideration received by the service provider. He has submitted that both the Show Cause Notices were issued without examining the books of account maintained by M/s. Sharma and were issued on the basis of presumptions about the consideration received by M/s. Sharma. The considerations taken into account for issue of Show Cause Notices was in no way near to the actual consideration received by M/s. Sharma during the relevant period which should be the basis for arriving at the assessable value. He has stated that they had elaborated before the Original Authority various reasons for discrepancies in the figures arrived at presuming the considerations received by M/s. Sharma on the basis of such TDS Certificates and the figures in the returns. He has further relied upon this Tribunal's Final Order in the case of Alpa Management Consultants P. Ltd. v. Commissioner of Service Tax, Bangalore reported in 2007 (6) S.T.R. 181 (Tri. Bangalore). He submitted that this Tribunal in the said case has held that demands, solely based on the income-tax returns for liability of Service Tax under Finance Act, 1994 is not sustainable. In respect of appeal filed by Revenue ld. counsel for M/s. Sharma has contended that the grounds of appeal are travelling beyond the Show Cause Notice and therefore that is not sustainable. He has further elaborated that cargo handling was brought in as ground by Revenue in the appeal filed by Revenue whereas that issue was not at all dealt with in the Show Cause Notices dated 20-4-2009 & 13- 10-2009.
4.Heard the ld. DR, who has presented the grounds of appeal in appeal filed by Revenue.
5. Having considered the rival contentions and on perusal of record, we find that in the cases of both the Show Cause Notices dated 20-4-2009 & 13-10-2009 there is no whisper of examination of books of account maintained by M/s. Sharma to arrive at the value of consideration received by them. Surprisingly the draft audit report was the relied upon document. It may be worth mentioning here that the purpose of audit report is to point out any discrepancy to the notice for examination by the executive and it is the duty of executive to examine the records and examine the objection raised with reference to the records and facts of the case and take a view whether there is a sustainable case for issue of Show Cause Notice. Such vital aspects of framing of charges have been missing in the present case. The charges in the Show Cause Notice have to be on the basis of books of account and records maintained by the assessee and other admissible evidence. The books of account maintained by M/s. Sharma were not looked into for issue of abovestated two Show Cause Notices. Therefore, the transactions recorded in the books of account cannot be held to be contrary to the facts. Therefore, we hold that the said Show 11 Service Tax Appeal No. 20186 Of 2023 Cause Notices are not sustainable. Since the said Show Cause Notices are not sustainable, appeal bearing No. ST/890/2010 filed by M/s. Sharma is allowed and appeal bearing No. ST/949/2010 filed by Revenue is dismissed. Miscellaneous Applications also stand disposed of. Cross Objection also disposed of."
From the record it is very clear that none of the records of appellant were taken into consideration for framing of charges that appellant had short paid service tax to the tune of around Rs. 8 crores and the said charges were framed only on the basis of information in the form 26AS.
xxxxxxx xxxxx xxxxxxx xxxxxxxxx xxxxxxxx Further, we find that on the basis of form 26AS return filed under Income Tax Act without examining any other records of the appellant. Charges of short payment of service tax to the tune of Rs. 8.00 crores were made against the appellant. It was possible for Revenue to know the transactions between other parties & appellant from form 26AS. Revenue could have investigated into the nature of such transactions & should have established that the said transactions were in respect of provision of said service. Then alone the charges of short payment of Service Tax would have sustained. We find that Final Order of this Tribunal in the case of Sharma Fabricators Pvt. Ltd. (supra) is squarely applicable in the present case. We, therefore, hold that Revenue did not discharge its burden to prove short payment of service tax. We also hold that the said show cause notice dated 05.10.2016 is not sustainable."
9. Further, in the case of Raj Kumar Verma vs. Commissioner of Central Excise and Central Goods Service Tax, Ujjain13 this Tribunal observed as under:-
"10. Coming to the issue of invocation of extended period of limitation while issuing the impugned show cause notice, I observe that the non- filing of ST-3 returns is alleged as the act of suppression. However, it has been observed that even in reply to the show cause notice, the appellant had explained that exemption being arising from notification 25/2012 has been the reason to not to file the returns. The said contention of appellant has been accepted as held already above, I hold that there is no act of suppression being committed by the appellant. Present is not the case of evasion of service tax. Hence, it is held that extended period has wrongly been invoked. The show cause notice itself therefore gets barred by time. The order under challenge, upholding the invocation of extended period is therefore held liable to be set aside. The above observed facts are also sufficient to hold that penalty has 13 Final Order No. 58606 of 2024 dated 19.09.2024 (Tri.-Del.) 12 Service Tax Appeal No. 20186 Of 2023 also been wrongly imposed. The order to that extent also is held liable to be set aside."
10. Further, the Tribunal in the case of M/s Rare Township Private Limited vs. Commissioner of CGST and Central Excise, Navi Mumbai14 observed as under:-
"6. It would appear from the terms and conditions of notification that the prescription, evidencing appropriate stamp duty having been discharged, was intended to authenticate the date on which the contract had been entered into. No other purpose appears to be served insofar as the legislative enactment of Union of India is concerned. From perusal of the relevant agreement, it is seen that the State of Maharashtra, represented by His Excellency the Governor, is one of the parties and it would appear that, in the absence of any examination of the provisions under which stamp duty liability arises on any transaction of the State Government, the lower authorities erred in not accepting the claim of the appellant in the absence of finding that such exemption was not available. It would appear that the refund claim had complied with the requirement of law as set out in the notification as well as section 11B of Central Excise Act, 1944."
11. In view of the above cited decisions, I set-aside the impugned order and allow the appeal filed by the appellant with consequential relief, if any.
(Order pronounced in the open Court on 03.04.2025) (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) G.Y. 14 Final Order No. 85856 of 2024 dt. 14.08.2024