2026-VIL-1408-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Vagueness of Show Cause Notice - Identification of taxable services and service recipients - Department issued Show Cause Notice invoking extended period of limitation raising demand on unbilled revenue reflected in balance sheet and difference between ST-3 returns and Income Tax returns - Whether Show Cause Notice is vague for not identifying category of services, service recipients and consideration and whether it is permissible to raise demand merely based on figures appearing in balance sheet and difference between tax returns - HELD - It is settled principle that for levying service tax, the category of services and recipient of services must be identified precisely with clarity. The SCN merely sets out audit objections and correspondence between parties without mentioning what service was provided, to whom and what was the consideration. The SCN does not specify the service rendered or the recipients thereof - A public sector company like the appellant would not intentionally withhold information with intent to evade payment of service tax. The correspondence made by the department with the appellant dwells on discrepancies in figures and there are no queries regarding nature of services - Merely because the appellant had registered itself for multiple service categories does not eliminate the obligation of the Department to identify specific services rendered. Though the revenue alleges non-cooperation by the appellant, it is difficult to believe that the department could not verify the nature of service rendered. The SCN cannot be sustained on a vague and non-committal basis without making even a remotely credible attempt to identify services and recipients. It is incumbent upon the department to identify services rendered and recipients thereof before fixing tax liability – Further, demand cannot be raised merely on the basis of figures in balance sheet or difference between tax returns without corroborative evidence establishing that such amounts are attributable to provision of services - The Show Cause Notice is not sustainable and the impugned order passed on basis thereof is set aside - The appeal is allowed
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