2026-VIL-1662-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Valuation of works contract service - Rule 2A of the Service Tax (Determination of Value) Rules, 2006 - Demand based on difference between figures in Income Tax Return and Service Tax Return - Appellant, registered under the composition scheme for works contract service and engaged in execution of original works, paid service tax on forty percent of the value of the works contract under Rule 2A(ii)(A), under reverse charge sharing fifty percent of the liability with the service recipient - Demand was raised alleging a difference between the Income Tax Return and Service Tax Return figures, and confirmed by treating part of the work as finishing work taxable at seventy percent under Rule 2A(ii)(B) - Whether the demand, treating part of the work as taxable at seventy percent and based merely on the return-figure difference, is sustainable - HELD - The work is execution of original works taxable only at forty percent under Rule 2A(ii)(A), the tax having already been paid under the relevant exemption Notification, the net rate under reverse charge being further reduced to reflect the fifty percent share - A demand founded solely on the difference between an Income Tax Return and a Service Tax Return, without examining the books of account or evidence that the recorded transactions are contrary to the facts, is not sustainable, the charges having to be based on the books of account and other admissible evidence - The notice, issued without such examination, is not sustainable, and the demand is set aside - Service Tax - Invocation of extended period of limitation - Section 73(1) of the Finance Act, 1994 - Show cause notice was issued invoking the extended period beyond the normal period - Whether the extended period is invokable - HELD - No extended period is invokable, the notice having been issued beyond the normal period and thus barred by limitation - A difference of opinion between the department and an assessee, or non-payment under a genuine belief that duty is not leviable, does not by itself establish wilful suppression, and the ingredients for invoking the extended period cannot be presumed merely from self-assessment - The demand is barred by limitation - The impugned order is set aside and the appeal is allowed.
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