2026-VIL-675-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Whether the demand of short payment of service tax under Reverse Charge Mechanism with respect to architect service alleging non-payment of service tax on TDS payments in this respect is correct - HELD – Though the demand of Service Tax is under Reverse Charge Mechanism pertaining to services received from foreign service providers and Section 66A of the Finance Act as well as Rule 2(1)(d)(iv) of Service Tax Rules have been invoked, however the SCN does not refer to the Taxation of Services (provided from outside India and received in India under which the demand has to be raised and has thereby failed to put the appellant to notice of the manner in which the taxability has arisen - The ascertainment of taxability of the services alleged to be received by the recipient with determination that they satisfy the requirement under any one of the three limbs of Rule 3 of the said Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, was a sine qua non to foist a liability of tax on the Appellant. Therefore, the SCNs suffer from a fundamental and incurable lacunae of having not put the appellant to notice of the applicable limb of Rule 3 of the Rules, 2006, and vitiate the consequent proceedings. The impugned orders holding the appellant liable to short paid/non paid tax under reverse charge mechanism for various services are unsustainable on this count alone – The impugned order is set aside and the appeal is allowed - Whether the demand of service tax under various services without bifurcating the consideration/amounts under each category is tenable - HELD - When the Department has chosen to demand service tax only on the figures taken from the financial statements (profit and loss account) and not from the invoices raised by the appellant, even though the appellant was admittedly audited, it is indicative of a failure of the Department, more so when there is no stated difficulty in collecting and collating the requisite evidence in respect of each such service received from the foreign service provider - The show cause notice is vague and unsustainable as it does not identify the relevant statutory provisions, detail how and why they are attracted, and quantify the consideration/amounts paid for each service, which is a sine qua non to raise a valid demand. The department failed to utilize its ample investigative powers to collect the requisite evidence and instead made a presumptive demand based on the profit and loss account, which is impermissible - Whether the denial of Cenvat credit of service tax paid on renting of immovable property is proper - HELD - The denial of Cenvat credit is not sustainable as the appellant has used the premises as a storage facility for its business, and there is no requirement under law that the input services must be received within the registered premises. The Tribunal relied on the decisions holding that no one-to-one correlation/nexus between the credit utilized and the service tax paid is required - Whether the invoking of extended period of limitation is tenable - HELD - The extended period of limitation is not invocable as there is no evidence of any positive act of suppression or willful misstatement with intent to evade payment of service tax on the part of the appellant - When the department had already conducted an audit and was aware of the appellant's activities, it could not have invoked the extended period in the subsequent notices.
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