2025-VIL-394-CESTAT-MUM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Extended Period of Limitation, Best Judgment Assessment- Appellant is a Psychoanalyst, Psychotherapist and a Mental Healthcare professional providing related healthcare services – Demand of service tax based on the income disclosed in the income tax returns - Department applied the best judgment method under Section 72 of the Finance Act, 1994 to raise the demand, invoking the extended period of limitation - Whether the service tax demand can be raised solely based on the income tax returns, without identifying the specific taxable service and the service recipients - HELD - Merely based on the income tax returns, without any independent inquiry to ascertain the nature of services provided and the service recipients, the department cannot raise a service tax demand by invoking the best judgment assessment under Section 72 – The appellant was under the bonafide belief that he is not liable for service tax and therefore neither he applied for service tax registration nor filed the service tax returns. The appellant had shown the entire amount received in his income-tax return and the tax liability under direct tax was duly discharged by the appellant. These facts establish that there was no malafide intention on the part of the appellant to evade payment of service tax – The information derived from the income-tax returns solely cannot be made the basis to confirm the demand of service tax herein by invoking the extended period of limitation as the department has failed to bring on record any positive act or malafide intention on the part of the appellant to evade the service tax - the demand of service tax is set aside and the appeal is allowed
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