2025-VIL-581-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Embroidery job work, Textile processing, Demand based on Form 26AS – Demand of service tax on the embroidery of textile - Department's contention that the embroidery activity does not qualify as textile processing which is explicitly mentioned in the exemption notification. The appellant contended that the activity of embroidery amounts to manufacture and is not covered under the purview of BAS, hence, it is exempt from service tax under Entry No.30(ii)(a) of the Mega Exemption Notification No.25/2012-S - Whether the activity of embroidery carried on by the appellant amounts to manufacture and is not covered under the purview of Business Auxiliary Service – HELD - The activity of embroidery carried on by the appellant amounts to manufacture and is not covered under the purview of Business Auxiliary Service - the Commissioner of CGST, Rohtak in the case of Shee Bankey Bihari Embroidery had held that the activity of embroidery amounts to manufacture and is not subject to service tax. The Revenue had accepted the said decision and cannot now take a contrary stand on the identical issue - the exemption under Entry No.30(ii)(a) of the Mega Exemption Notification No.25/2012-ST has been wrongly denied to the appellant on the ground that embroidery is altogether different from printing and textile processing. The term "textile processing" in the exemption notification should be understood in a broader sense to include activities like embroidery – The impugned order is set aside and the appeal is allowed - Whether the demand of service tax can be sustained based on the difference in Form 26AS and ST-3 Returns, and by invoking the extended period of limitation – HELD - the demand of service tax cannot be sustained merely based on the difference in Form 26AS and ST-3 Returns, as it has been consistently held that service tax cannot be demanded on the basis of Form 26AS without examining and analyzing the actual activity carried on by the appellant. The Tribunal further held that the extended period of limitation cannot be invoked merely on the basis of the difference in Form 26AS and ST-3 Returns, as no positive act of suppression or misrepresentation by the appellant has been established.
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