2026-VIL-1777-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Demand on the Basis of Form 26AS and Income Tax Returns and Invocation of Extended Period - Appellant, a registered person providing repair and maintenance services and goods transport agency service and filing returns, was issued a show cause notice for the extended period based on the mismatch between Form 26AS, Income Tax Returns and Service Tax Returns - Commissioner (Appeals) went through the factual details and reduced the demand substantially, and the Revenue did not appeal against the portion dropped - Appellant contended that suppression cannot be alleged against a registered person filing returns - Whether the demand confirmed on third party data without corroborative evidence and the invocation of the extended period are sustainable - HELD - The Department issued the initial notice without proper verification and investigation, purely on Form 26AS details. Mere entries in Income Tax Returns or Form 26AS cannot by themselves establish liability under the Finance Act, 1994 unless corroborated by evidence demonstrating rendition of taxable service. Mechanical reliance on income tax data without verification of the nature of receipts is impermissible - Form 26AS is maintained on a cash basis for income tax while service tax is chargeable on accrual basis. The extended period is not invokable on the basis of such data - The balance demand for the extended period is set aside, and the Appellant is to pay service tax, if any, with interest for the normal period after proper quantification - The appeal is partly allowed - Service Tax - Confirmation of Demand for Part of the Year by Proportionate Allocation of Income Not Proposed in Show Cause Notice - Commissioner (Appeals) confirmed demand for the first three months of the financial year by proportionately allocating the income, when the show cause notice had not proposed such a procedure - Whether the demand quantified by proportionate allocation without proper data can be sustained - HELD - The Commissioner (Appeals) calculated the liability without any proper data for the three months, and such a procedure was not proposed in the show cause notice - The service tax liability so confirmed is set aside, and the appeal is partly allowed
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