2026-VIL-519-GAU-ST
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SERVICE TAX High Court Cases

Service Tax – Exemption to Health Care Services - Determination of Tax Liability must precede Assessment - Petitioner, a diagnostic centre and hospital, provided health care services which were expressly exempted under Notification No. 25/2012-Service Tax dated 20.06.2012 - Dept issued a show cause notice alleging suppression of taxable value based solely on information collected from Form 26AS - Demand by invoking the extended period of limitation under section 73(1) of the Finance Act, 1994 – HELD - Before any assessment can be made and tax demanded, there must first be a declaration of liability under the statute. The determination of whether a service is taxable or exempted is a threshold question that must be conclusively decided before invoking extended period of limitation. Form 26AS merely reflects income tax deducted at source and cannot ipso facto determine service tax liability, as a receipt liable to income tax may not be liable to service tax due to exemptions granted under the Finance Act or because the liability may rest on the recipient under reverse charge mechanism - The revenue authorities' action in levying service tax based solely on Form 26AS without examining the nature of services and applicability of exemption was contrary to law and amounted to assumption of jurisdiction - The extended period of limitation under section 73(1) can be invoked only when the preconditions prescribed in the proviso are satisfied, namely: fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions with intent to evade payment of service tax. These are not mere procedural requirements but substantive conditions that demand conclusive findings by the revenue authorities based on facts and circumstances - The assumption of jurisdiction by the authorities without fulfilling the mandatory preconditions prescribed by the statute itself was unauthorized and colourable - The impugned demand cum show cause notice and order-in-original are set aside and quashed - The writ petition is allowed
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