2026-VIL-1864-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Demand on third party data - Absence of investigation - Appellant was engaged in weaving of unfinished carpets and durries on job work basis and was not registered with the Service Tax Department. On the basis of third party data supplied by the Income Tax Department, SCN was issued to demand Service Tax on the gross receipts declared in the ITR. The demand was confirmed with interest and penalties, and the FAA upheld the order - Whether the demand can be sustained when the SCN is issued solely on third party data without any investigation or verification - HELD - The Department had not carried out any investigation to verify the correctness of the data provided by the Income Tax Department. It was necessary to check the veracity of the data, and only if found otherwise, the SCN should have been issued. The Department had the power to summon the Appellant and to visit his premises to collect information. Instead, it presumed that the third party data was correct and that no further verification was needed. The SCN was thus based purely on presumption and assumption, and the Adjudicating Authority confirmed the demand on the same basis. The demand is not sustainable - The impugned order is set aside and the appeal is allowed - Extended period of limitation - Proviso to Section 73(1) of Finance Act, 1994 - SCN invoking the longer period of limitation was issued on the basis of figures picked up from the ITR, Balance Sheet and Profit and Loss Account maintained by the Appellant - Whether the extended period of limitation can be invoked when the income is reflected in these documents - HELD - The ITR, Balance Sheet and Profit and Loss Account are public documents. When the income stands reflected in them, it cannot be said that there was any suppression or misstatement on the part of the assessee so as to invoke the longer period of limitation. The SCN itself shows that every detail was maintained by the Appellant in the usual course of business. The ingredients of the proviso to Section 73(1) of the Finance Act, 1994 are therefore not present, and the demand is barred by limitation - The impugned order is set aside and the appeal is allowed.
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