Hastha Alternate Building Technology and Research Pvt. Ltd. Vs Commissioner of Central Tax (CESTAT Bangalore)
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Bangalore, has upheld a Service Tax demand against Hastha Alternate Building Technology and Research Pvt. Ltd. for the period October 2014 to March 2015, confirming the levy of {Rs. } 5,08,440/- along with interest and equivalent penalty. The Tribunal’s decision was based on the appellant’s failure to offer a plausible explanation for a glaring discrepancy between the gross receipts from services declared in its Income Tax Returns (ITR) and the corresponding figures reported in its ST-3 Service Tax returns.
The case originated from a departmental scrutiny of the appellant’s ITR for the Financial Year 2014-15, which showed a total income from services of {Rs.}54,95,650/-. In sharp contrast, the ST-3 returns for the same period declared only {Rs. }1,75,720/-, resulting in an unexplained difference of {Rs. }53,19,930/- and a short payment of service tax. Initially, the department issued a show-cause notice (SCN) demanding a total tax of {Rs. }31,56,964/- for the periods 2014-15 through June 2017, using the Best Judgment Method (Section 72 of the Finance Act, 1994) to estimate the value for later years by applying a 20% markup.
