K. D. Merchants Pvt. Ltd. Vs Commissioner of Central Goods & Service Tax (CESTAT Allahabad)
The appeal was filed against an order passed by the Commissioner (Appeals), CGST, Noida, concerning a demand of service tax based on third-party data obtained from the Income Tax Department.
The Appellant, a registered service tax assessee, was subjected to an enquiry after the department observed that the value of services provided during 2015–16 amounted to Rs. 85,45,477/- as per Income Tax data. Relying on this information, the department calculated a service tax liability of Rs. 12,39,094/- at a uniform rate of 14.5% and issued a show cause notice under Section 73(1) of the Finance Act, 1994, along with interest and penalties.
During adjudication, it was found that the Appellant had already declared the same value of services in ST-3 returns filed for the relevant period. The only discrepancy was in the computation of tax liability. The Appellant had calculated tax liability at Rs. 11,95,096/-, whereas the department demanded a higher amount. Despite this, the adjudicating authority confirmed the higher demand along with interest and imposed penalties under Sections 73(1) and 77(1)(d).
On appeal, the Commissioner (Appeals) acknowledged that service tax rates had changed during the relevant period and that applying a uniform rate of 14.5% was incorrect. Accordingly, the demand was reduced to Rs. 11,95,096/-. After adjusting Rs. 3,25,468/- already paid, the remaining demand of Rs. 8,69,628/- was confirmed along with interest and equal penalty. A penalty of Rs. 5,000/- under Section 77(1)(d) was also upheld.
