2026-VIL-1068-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Invocation of extended period of limitation based on suppression of facts - Demand raised solely on difference between Service Tax Return (ST-3) and Form 26AS without independent investigation - Whether the extended period of limitation can be invoked and service tax demand can be sustained when the entire demand is based solely on the difference between figures reflected in ST-3 returns and Form 26AS without any independent investigation by the department - HELD - The extended period of limitation cannot be invoked and the demand cannot be sustained on the basis of mere difference between ST-3 and Form 26AS without independent investigation. The service tax exigibility depends on four essential elements: service provider, service rendered, service recipient, and consideration thereof. Unless these elements are logically connected and established through independent investigation, demand based merely on figures reflected in statutory documents does not sustain. Form 26AS is maintained by the Income Tax department on cash/receipt basis for TDS purposes, whereas service tax is chargeable on mercantile basis on services actually provided. The Department is under an obligation to prove that the assessee rendered such and such services to such and such persons and received consideration towards such rendering - Demands cannot be sustained based on notional income or mere differences in statutory returns without examining the reasons for such differences or establishing whether the differential amount represents consideration for taxable services or is attributable to exempted/abated services. Furthermore, when an assessee is a registered service provider regularly filing returns and paying self-assessed tax, and the original authority acknowledges receipt of ST-3 returns and tax deposits, such conduct falsifies allegations of suppression. Suppression of facts requires proof of willful non-disclosure of correct information with intent to evade duty, which cannot be inferred merely from the department's inability to retrieve documents from its own portal. The department's failure to conduct independent investigation, combined with the assessee's regular filing of returns and tax payments, demonstrates that no malafide intention or positive act of concealment has been established on record - The extended period of limitation is held to have been wrongly invoked, and the demand of service tax along with consequential interest and penalties imposed is set aside - The appeal is allowed
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