04.03.2022- Amount Reflecting In The Form 26AS Cannot Be Used For Determining Service Tax Liability Against The Assessee

The Hon’ble CESTAT, Kolkata vide its order dated 23.02.2022 in the matter of M/s Luit Developers Private Limited Vs. Commissioner of CGST & Central Excise, Dibrugarh in Service Tax Appeal No. – 75792 of 2021, held that figures reflected in the 26AS cannot be used for determining Service tax liability against the assessee.

The Appellant preferred the appeal assailing the Order-in-appeal dated 29.07.2021 passed by the Commissioner (Appeals) whereby Service tax demand of Rs. 10,17,623/- for the period April 2014  to March 2017, was confirmed against the appellant along with interest and imposition of penalty under Section 78.

Facts: –

  • The Appellant is engaged in providing the service of renting of immovable property to various tenants.
  • That based on the information received from CBIC, Delhi regarding mismatch of income reflected in the Appellant’s 26AS and ST-3 returns, a parallel investigation was initiated against the Appellant by Dibrugarh Commissionerate and GST intelligence, Guwahati.
  • The Appellant duly provided the documents as sought during the investigation by the department, and based on those documents a show cause notice 08.11.2019 was issued for non-payment of tax on RCM based on mismatch of gross income reflected in Form 26AS and ST-3 returns.
  • The appellant duly filed a reply to the aforesaid Show Cause Notice along with a CA certified reconciliation of Form 26AS & ST-3 returns however the Ld. adjudicating authority not agreeing to the submissions made confirmed the demand against the Appellant.
  • The appellant preferred an appeal against the aforesaid order of adjudicating authority before the Commissioner (Appeals), which was also dismissed vide impugned order.

Appellant’s Plea:

  • It was submitted on behalf of the appellant that no more service tax is payable because the CA certified reconciliation submitted very clearly shows that some service recipients deducted TDS on the entire rent/commission plus the Service Tax component caused the inflation in 26AS in comparison to ST-3.
  • The service tax has already been charged/collected by the service provider and later on paid to department, thus the service tax cannot be demanded again on the transaction.
  • Relying on the judgment of the Tribunal in Kush Constructions vs CGST NACIN 2019 (34) GSTL 606, Synergy Audio Visual Workshop Pvt Ltd versus Commissioner of Service Tax Bangalore 2008 (10) STR 578 and in CCE Ludhiana vs Deluxe Enterprises 2011 (22) STR 203, submitted that it is trite law that figures of Form 26AS cannot be used for determining the Service Tax liability unless there is a evidence to substantiate that it was received for taxable service.
  • It was further submitted on behalf of the appellant that extended period is not invokable in the present matter and the whole demand is time barred (Reliance placed on:- Satish Kumar & Co vs Commissioner of Central Excise Nagpur 2019(22) GSTL 269, Gannon Dunkerley & Co Ltd vs CST(Adjudication) Delhi 2021(47)GSTL 35 (Tri-Del), Universal Dredging & Reclamation Corporation Ltd vs Commissioner of CGST & Central Excise Madurai 2021(44) GSTL 401, (Tribunal Chennai), Hindalco Industries Ltd vs Commissioner of Central Excise Allahabad-2003 (161) ELT 346 (Tribunal-Delhi) and Kirloskar Oil Engines Limited vs. CCE Nasik 2004 (178) ELT 998 (Tri.Mumbai).

On the other hand, the Ld. D.R. justifies and reiterates the findings of the impugned order of the Commissioner (Appeals) and prayed for dismissing the appeal.

Held:

  • The Hon’ble CESTAT after considering the submissions from the both sides held that there is force in the contentions raised on the behalf of the appellant: –
  1. CA certified reconciliation of ST-3 returns and Form 26AS clearly shows that inflated figures reflecting in the Form 26AS is because some service recipient deducted TDS on rent/commission and the service tax component both.
  2. The service tax demand on RCM has already been charged/collected by the service provider and paid to the department, hence cannot be demanded again.
  3. The figures reflecting in the Form 26AS cannot be used to determine the liability under Service Tax until and unless there is evidence to substantiate that it was received for the taxable services.
  4. The extended period has been wrongly invoked in the present matter in view of the judgments referred by the appellant.

The Hon’ble CESTAT with the above findings set aside the impugned order in view of the decisions cited by the appellant and allowed the appeal with the consequential relief.

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