Case Law Details
Tabassum Enterprises Vs Commissioner of CGST & CX (CESTAT Kolkata)
The appellant, a proprietorship concern engaged in arranging transportation of goods, filed an appeal against the order confirming service tax demand under the category of Goods Transport Agency (GTA) service. Although registered under GTA service, the appellant did not issue consignment notes. The Department relied on information received from the CBDT showing higher “sale of services” in the appellant’s Income Tax Returns for the financial years 2015-16, 2016-17, and 2017-18, while the appellant had declared nil taxable value in its ST-3 returns. Based solely on this data, the Department alleged suppression of taxable value, issued a show cause notice demanding service tax of ₹25,10,850 with interest and penalty, and, after appeal, the Commissioner (Appeals) upheld the demand to the extent of ₹21,57,962 along with interest and equal penalty.
The appellant contended that the demand was based entirely on CBDT data without any independent or corroborative evidence to establish that taxable GTA services had actually been provided. It further argued that it merely arranged transportation of goods and never issued consignment notes. Therefore, its services did not qualify as GTA services and were covered by the Negative List under Section 66D(p)(i)(A) of the Finance Act, 1994. The appellant also challenged the invocation of the extended period of limitation, submitting that the entire demand was based on information already available with the Department through the CBDT.
The Tribunal observed that the service tax demand had been confirmed solely on the basis of data received from the CBDT without any independent verification from service tax records or evidence establishing the nature of the receipts or the actual rendition of taxable services. Relying on several Tribunal decisions, it held that entries in Income Tax Returns or Form 26AS, by themselves, cannot establish liability under the Finance Act, 1994. The Tribunal noted that service tax liability requires proof of the service provider, service recipient, taxable service rendered, and consideration received, which had not been established in the present case. Accordingly, it held that the demand could not be sustained on the basis of CBDT data alone.
On the merits, the Tribunal found that the appellant did not issue consignment notes. It held that transportation of goods by road is taxable as GTA service only where the service provider issues consignment notes. Since no consignment notes were issued, the services rendered by the appellant fell within the Negative List under Section 66D(p)(i)(A). Relying on the Supreme Court’s decision in CCE, Ahmedabad-II v. Chartered Logistics Ltd., the Tribunal held that the demand was unsustainable. It also rejected the Department’s objection that the issue regarding non-issuance of consignment notes had been raised for the first time during the appeal, observing that a legal issue could be raised at any stage and that there was no evidence contradicting the appellant’s claim.
The Tribunal further held that the extended period of limitation could not be invoked because the demand was entirely based on CBDT data already available with the Department and there was no evidence of suppression of facts with intent to evade tax. Consequently, the demand was also unsustainable on the ground of limitation. Since the service tax demand itself was set aside, the Tribunal also set aside the interest and penalty. Accordingly, the impugned order was quashed, and the appeal was allowed with consequential relief in accordance with law.
FULL TEXT OF THE CESTAT KOLKATA ORDER
Service Tax appeal No. ST/75037/2025 has been filed by M/s. Tabassum Enterprise (herein after referred as the appellant, a proprietorship concern (Prop. Shahnawaz Khan) engaged in the business of providing service of arranging goods transportation. The appellant do not issue consignment notes. However, the appellant has taken registration with the Department under the category of Goods Transport Agency Service.
1.1. The information received from CBDT revealed that the appellant has shown the value of ‘Sale of Service’ in their Income Tax Returns as Rs. 51,47,648/- and Rs. 94,10,352/- for the Financial Years 2015-16 and 2016-17 respectively. For the period during the period April, 2017 to June, 2017, the Department was not having any taxable value on pro-rata basis. Thus, the gross value declared for the entire financial year 2017-18 has been taken into account as the taxable value for the three months from April, 2017 to June, 2017. However, the officers observed that in the ST-3 Returns filed by the appellant during the relevant period, their gross taxable value has been shown as NIL. The department has considered the gross value declared in the Income Tax Returns as the value of taxable for the period 2015-16 to June and calculated the gross suppressed taxable value as Rs. 1,69,10,588/-.
1.2. On the basis of the data received from CBDT, a Show Cause Notice under C No. V(15)32/BLP/Adjn/BHWN/CGST&CX/KS/2020-
21/2407 dated 29.12.2020 was issued to the appellant demanding service tax of Rs. 25,10,850/-along with interest and equal amount of penalty under Section 78 of the Finance Act, 1994.
1.3. On adjudication, the Ld. adjudicating authority confirmed the demand of service tax raised in the Notice along with interest and imposed equal amount of tax as penalty.
1.4. On appeal, the Ld. Commissioner (Appeals-I) vide Appeal Order No. 302/ST-Kol/ST/Kol-S/2024-25 dated 22.08.2024 did not agree with the calculation of demand on pro-rata basis for the period April, 2017 to June, 2017 and dropped the service tax demand of Rs. 3,52,888/- from the aforesaid demand of Rs. 25,10,850/- Hence, In the impugned order, the Ld. Commissioner (Appeals) has confirmed the service tax demand to the extent of Rs. 21,57,962/- along with interest and imposed equal amount of tax as penalty.
1.5. Aggrieved against the confirmation of the demands, the appellant has filed this appeal.
2. The appellant submits that the demand has been raised and confirmed on the basis of CBDT data without adducing any corroborative evidence, which is impermissible. There is no evidence brought on record to substantiate the allegation that the appellant has actually rendered the GTA service to the customers. Accordingly, the appellant contends that the demand confirmed in the impugned order on the basis of assumptions and presumptions is not sustainable. In support of this view, the appellant relied on the following decisions: –
i. M/s. Rishu Enterprise v. Commissioner of C.G.S.T. & C.Ex., Dibrugarh [Service Tax Appeal No.75509 of 2022 – CESTAT, Kolkata].
ii. M/s. Quest Engineers & Consultant Pvt. Ltd. v. Commissioner of C.G.S.T. & C.Ex., Allahabad [2022 (58) G.S.T.L. 345 (Tri-All)]
iii. M/s. GopiChenna v. Commissioner of Central Tax, Medchal – GST [Final Order No. A/3007830079/2024 dated 26.02.2024 in Service Tax Appeal No. 30412 of 2023 & anr. – CESTAT, Hyderabad]
iv. M/s. Indian Machine Tools Manufacturers Association v. The Commissioner of C.Ex., Panchkula [Final Order No. 60403 of 2023 dated 18.09.2023 in Service Tax Appeal No. 4174 of 2012 – CESTAT, Chandigarh]
v. M/s. Forward Resources Pvt. Ltd. v. Commissioner of C.Ex. & S.T., Surat-I [2023 (69) G.S.T.L. 76 (Tri. – Ahmd.)]
2.1. The appellant further submits that they were rendering the service of arranging transportation of goods. They did not issue any consignment note. The appellant submits that the service of transportation of goods by road is liable to service tax under the category of GTA service, only when the service provider issues ‘consignment notes’. As they have not issued any ‘consignment note’ the service rendered by them were clearly excluded, as the said services were covered in the ‘Negative List’ Entry under Section 66D(P)(i)(A) of Finance Act, 1994. This view is supported by the judgment of Hon’ble Apex court in the case of CCE, Ahmedabad-II v Chartered Logistics Ltd. [(2024) 16 Centac 474 (SC)].
2.2. Thus, by relying on the ratio of the decision cited supra, the appellant submitted that the demand confirmed in the impugned order is not sustainable and prayed for setting aside the same. As the demand of service tax is not sustainable, the appellant prayed that no penalty imposable.
2.3. Regarding the issue of limitation, the appellant submits that the entire demand was raised and confirmed in the impugned order on the basis of data received from CBDT which were always available with the department. Therefore, there has been no suppression of the facts with intention to evade the tax established in this case. Thus, the appellant submits that invocation of extended period is not warranted in the instant case. In support of this claim, the appellant relied on the following decisions:
i. M/s. Munna Construction v CCE&ST [Final Order No. 77625/2024 dated 22.11.2024]
ii. Arya Logistics v CCE &ST Rajkot [ST Appeal No. 12389 of 2014 DOD 17.08.2023]
iii. Balajee Machinery v Comm of CGST &Excise, Patna-II [2022(66) GSTL 440 (T-Kol)]
3. The Ld. A.R. reiterated the findings in the impugned order. Vide written submission dated 12.09.2015, the Ld. A.R. submitted that the appellant has not raised the issue of not issuing ‘Consignment Notes’ earlier. Thus, raising this ground at this stage is only an afterthought. Further, the appellant could not submit any evidence to substantiate their claim. Accordingly, the Ld. A.R submitted that the new stand taken by the appellant should not be considered.
4. Heard both sides and perused the appeal documents.
5. I find that the present demand has been raised and confirmed on the basis of data provided by the Central Board of Direct Taxes (CBDT). It is observed that the said demand has been confirmed without the support of any independent or corroborative evidence from the Service Tax records. Such mechanical reliance on Income Tax data, without verification of the nature of receipts or proof of taxable services rendered, is impermissible in law. It is a settled legal position that 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.
5.1. In support of this view, I rely upon the decision in the case of M/s. Rishu Enterprise vs Commissioner of C.G.S.T. & Excise, Dibrugarh, in Final Order No. 75177 of 2024 dated 08.02.2024 in Service Tax Appeal No. 75509 of 2022 [CESTAT, Kolkata], wherein this Tribunalhas observed as under: –
“8. In view of the judicial pronouncement of this Tribunal, we hold that merely on the basis of Form 26-AS issued by the Income Tax Department, the demand of Service Tax is not sustainable against the appellant.
………..
11. In view of this, we hold that the impugned demand is not sustainable against the appellant on the basis of the details provided by the Income Tax Department in Form 26AS and the extended period of limitation is not invokable.”
5.2. The same view has been held by the Tribunal at Allahabad in the case of M/s.Quest Engineers & Consultant Pvt. Ltd. v. Commissioner of C.G.S.T. & C.Ex., Allahabad [2022 (58) G.S.T.L. 345 (Tri. – All.)]observing as follows: –
“12. ….
….We further find that Form No. 26AS is not a statutory document for determining the taxable turnover under the Service Tax provisions. We find that Form No. 26AS is maintained on cash/ receipt basis by the Income Tax Department for the purpose of tax deducted at source, etc. being the relevant data for Income Tax. Whereas under the Service Tax provisions, the service tax is chargeable on mercantile basis (accrual basis) on the service provided whether the value of such service is received or not. Thus, we find that the whole basis of show cause notice is incorrect and/or misconceived.”
5.3. In this regard, I also find it pertinent to refer to the decision rendered in the case of M/s. Gopi Chenna v. Commissioner of Central Tax, Medchal – GST [Final Order No. A/30078-30079/2024 dated 26.02.2024 in Service Tax Appeal No. 30412 of 2023 & anr. – CESTAT, Hyderabad], wherein a similar view has been expressed by the Tribunal at Hyderabad. The relevant observation of the Tribunal in the aforesaid case is reproduced below: –
“7. On going through the records of the case, it is clear that the cases are made on the basis of third party data i.e., amounts reflected in Income Tax Returns and in Form 26AS. Revenue takes the stand that in the Negative List regime, Department is not obliged to prove the provision of a particular service to demand service tax and further, the Appellants could not explain that the difference satisfactorily. I find that this is not the correct approach; exigibility to service tax depends on the service provider, service rendered, service recipient and the consideration thereof. Unless these four elements have been connected logically, demand of service tax cannot be confirmed merely on the basis of figures reflected in other statutory records.”
5.4. Further, in the case of M/s. Indian Machine Tools Manufacturers Association v. The Commissioner of C.Ex., Panchkula [Final Order No. 60403 of 2023 dated 18.09.2023 in Service Tax Appeal No. 4174 of 2012 – CESTAT, Chandigarh], the Tribunal, Chandigarh has held as under:
“11. Coming to third and final issue as to whether any demand can be sustained on the basis of difference between the figures of ST-3 Returns and the balance sheets, we find that it is a settled principle of law that service tax can be levied only when there is a clear identification of service provider, service recipient and consideration paid for the same. In the absence of any such evidence of the service recipient and the service provided, service tax cannot be demanded and confirmed. For this reason, we are of the considered opinion that it is not open for the Department to raise demands on the basis of other statutory returns like Income Tax Returns or balance sheets without proving that such service has been rendered by the assessee and consideration thereof has been received. Similarly, no service tax demand can be raised and confirmed on the basis of notional income.”
(Emphasis supplied)
5.5. I also refer to the decision of the Tribunal, Ahmedabad in the case of M/s. Forward Resources Pvt. Ltd. v. Commissioner of C.Ex. & S.T., Surat-I [2023 (69) G.S.T.L. 76 (Tri. – Ahmd.)], wherein a similar issue has been examined by the Tribunal. The relevant observations of the Tribunal in the aforesaid case are reproduced below: –
“5.6 We also find that in the present matter for confirmation of service tax demand Ld. Commissioner also relies upon the TDS/26AS Statement. The said statement under provisions of Income-tax Act, 1961 is an Annual Consolidated tax statement. Income-tax and service tax are two different/separate and independent Acts and their provisions operating in two different fields. Therefore by relying the 26AS/TDS Statement under the Service Tax Act, demand of service tax cannot be made. We also find the support from the decision of Ved Security v. CCE, Ranchi-III – 2019 (6) TMI 383 CESTAT, Kolkata wherein it was held that the value of taxable services cannot be arrived at merely on the basis of the TDS statements filed by the clients inasmuch as even if the payments are not made by the client, the expenditure are booked based on which the Form 26AS is filed, which cannot be considered as value of taxable services for the purpose of demand of Service tax.”
5.6. Following the ratio of the decisions cited supra, I hold that the demand of service tax confirmed in the impugned order, solely relying the data received from CBDT, without adducing corroborative evidence in support, cannot be sustained. Thus, I observe that the demand confirmed in the impugned order is liable to be set aside on this ground itself.
6. Regarding the merits of the case, I find that the appellant were rendering the service of arranging transportation of goods. They did not issue any consignment note. I observe that the service of transportation of goods by road is liable to service tax under the category of GTA service, only when the service provider issues ‘consignment notes’. As the appellant have not issued any ‘consignment note, I hold that’ the service rendered by them were clearly excluded, as the said services were covered in the ‘Negative List’ Entry under Section 66D(P)(i)(A) of Finance Act, 1994. I find that this view is supported by the judgment of Hon’ble Apex court in the case of CCE, Ahmedabad-II v Chartered Logistics Ltd. [(2024) 16 Centac 474 (SC)]. For ready reference, the relevant portion of the said decision, is reproduced below:
Tribunal was justified in holding that transportation of goods by road by assessee would not be taxable as GTA service when consignment note was not issued by assessee and said services were clearly excluded from taxable services being covered in ‘Negative List’ Entry under Section 66D(P)(i)(A) of Finance Act, 1994.
6.1. Thus, by relying on the ratio of the decision cited supra, I hold that the demand confirmed in the impugned order is not sustainable.
6.2. In this regard, I observe that the Ld. A.R contended that the appellant has not raised the issue of not issuing ‘Consignment Notes’ earlier. Thus, raising this ground at this stage is only an after thought. I observe that the legal issues can be raised at any stage. In respect of ‘GTA’ service, the issue of ‘Consignment Notes’ is a primary requirement. It is on record that the appellant has not issued ‘Consignment Notes’. Thus, to establish their case, the appellant can raise this point in support of their claim. As there is no evidence contrary to the claim made by the appellant, I hold that the objection of the Revenue on this ground is not sustainable.
7. Regarding invocation of extended period of limitation to confirm the demand, I find that the entire demand was raised and confirmed in the impugned order on the basis of data received from CBDT which were always available with the department. Therefore, I find that suppression of the facts with intention to evade the tax has not been established in this case. Accordingly, I hold that extended period cannot be invoked in this case to demand service tax. In support of this view, I rely upon the following decisions:
i. M/s. Munna Construction v CCE&ST [Final Order No. 77625/2024 dated 22.11.2024]
ii. Arya Logistics v CCE &ST Rajkot [ST Appeal No. 12389 of 2014 DOD 17.08.2023]
iii. Balajee Machinery v Comm of CGST &Excise, Patna-II [2022(66) GSTL 440 (T-Kol)]
7.1. Thus, I hold that the entire demand confirmed in the impugned order by invoking extended period of limitation is not sustainable. Accordingly, I set aside the demand of service tax on the ground of limitation also.
8. As the demand of service tax is not sustainable, I hold that the demand of interest or imposition of penalty does not arise and hence I set aside the same.
9. In view of the above findings, I set aside the impugned order and allow the appeal filed by the appellant with consequential relief, if any, as per law.
(Order Pronounced in Open court on 19.09.2025)
Author Bio
