Anup Kumar Metya Vs Commissioner of C.G.S.T. & C.X. (CESTAT Kolkata)
Shri Anup Kumar Metya filed an appeal before CESTAT Kolkata against Order-in-Appeal No. 291/HAL/ST/2024-25 dated 12.08.2024, which had upheld the Service Tax demand, interest and penalties confirmed in Order-in-Original No. 64/AC/Haldia-II/ADJN/2023-24 dated 01.06.2023.
The proceedings originated from a Show Cause Notice dated 10.09.2020 issued after comparison of the appellant’s Income Tax Returns and Form 26AS received from the Income Tax Department with his Balance Sheet and Profit & Loss Account for 2014-15 to 2016-17. The Revenue proposed Service Tax demand of Rs. 5,19,009/- under the category of business auxiliary service under erstwhile Section 65(19) read with erstwhile Section 65(105)(zzb) of the Finance Act, 1994. The adjudicating authority confirmed Service Tax of Rs. 4,93,426/- inclusive of cess, along with interest, a penalty equivalent to the tax under Section 78(1), and a penalty of Rs. 10,000/- under Section 77 read with Section 174(2) of the Central Goods & Service Tax Act, 2017.
Before the Tribunal, the appellant submitted that the demand had been raised solely by comparing third-party Income Tax data with the Balance Sheet and Profit & Loss Account, without independent verification of the nature of services rendered or investigation at the service receiver’s end. The appellant also contended that the demand for 2014-15 to 2016-17 was raised under the erstwhile business auxiliary service provisions even though the period fell under the Negative List regime, and that the relevant provisions applicable after 30.06.2012 had not been invoked.
The Revenue reiterated the findings contained in the impugned order.
The Tribunal found that the Department had not conducted any independent verification before issuing the Show Cause Notice. It observed that the demand was based merely on comparison of the ITR, Form 26AS, Balance Sheet and Profit & Loss Account and was unsupported by corroborative evidence establishing the nature or taxability of the services. Relying upon the Tribunal’s earlier decision in M/s. Nanu Shome & Co. v. Commissioner of C.G.S.T & C.Ex., Siliguri and the other decisions referred to in that order, the Tribunal held that the demand was legally unsustainable on this ground.
The Tribunal further found that, for the period after 30.06.2012, Service Tax was leviable under Section 66B subject to the Negative List under Section 66D, whereas the Show Cause Notice invoked the erstwhile provisions relating to business auxiliary service and did not invoke the provisions relevant to the post-30.06.2012 period. It therefore held that the demand was unsustainable on this ground as well.
Accordingly, the Tribunal set aside the Service Tax demand. Since the demand itself did not survive, the interest and penalties were also set aside. The impugned order was set aside and the appeal was allowed with consequential relief, if any, as per law.
Background of the Service Tax Demand
The Show Cause Notice dated 10.09.2020 was issued after the Department examined the appellant’s Income Tax Returns and Form 26AS received from the Income Tax Department against his Balance Sheet and Profit & Loss Account for the period from 2014-15 to 2016-17.
On the basis of that comparison, the Revenue alleged that the appellant had not discharged Service Tax amounting to Rs. 5,19,009/- inclusive of cess under the category of business auxiliary service as defined under erstwhile Section 65(19) read with erstwhile Section 65(105)(zzb) of the Finance Act, 1994.
The adjudicating authority subsequently confirmed Service Tax of Rs. 4,93,426/- inclusive of cess, together with interest. A penalty equivalent to the amount of tax demanded was imposed under Section 78(1) of the Finance Act, 1994, along with a penalty of Rs. 10,000/- under Section 77 of the Finance Act, 1994 read with Section 174(2) of the Central Goods & Service Tax Act, 2017.
Appellant’s Submissions
The appellant submitted that the demand had been raised by comparing third-party data received from the Income Tax Department with the appellant’s Balance Sheet and Profit & Loss Account.
It was specifically contended that the Department had not independently verified the nature of services allegedly rendered by the appellant or whether such services were liable to Service Tax. The appellant also submitted that no independent investigation had been conducted at the service receiver’s end.
According to the appellant, a demand based solely on CBDT data, without investigation establishing the taxability of the services, could not be sustained.
Challenge to the Provisions Invoked
The appellant also challenged the legal basis of the demand. It was submitted that the period involved was 2014-15 to 2016-17, which pertained to the Negative List regime. According to the appellant, classification of services under a specific category such as business auxiliary service had been done away with during that regime.
The appellant therefore contended that the Show Cause Notice, which invoked erstwhile Section 65(19) read with erstwhile Section 65(105)(zzb) of the Finance Act, 1994, had not invoked the provisions relevant for the period after 30.06.2012.
Revenue’s Submissions
The Ld. Authorized Representative for the Revenue reiterated the findings contained in the impugned order.
CESTAT Kolkata’s Findings on CBDT Data
The Tribunal examined the basis on which the demand had been raised and found that it arose from scrutiny of the appellant’s Income Tax Returns and Form 26AS along with his Balance Sheet and Profit & Loss Account.
The Tribunal noted that the Department had asked the appellant to submit information including the Balance Sheet and Profit & Loss Account through a letter dated 03.10.2019, and that the appellant had submitted the details through his letter dated 18.10.2019.
Despite this, the Tribunal found that the Service Tax demand was raised merely by scrutinising the Balance Sheet, Profit & Loss Account, ITR and Form 26AS for the relevant period. No independent verification had been conducted and no corroborative evidence had been adduced to support the demand.
The Tribunal observed that demands based solely on CBDT data, without independent verification to establish the nature of services rendered or their taxability, were not sustainable in law.
Reliance on Earlier CESTAT Decisions
The Tribunal referred to its decision in M/s. Nanu Shome & Co. v. Commissioner of C.G.S.T & C.Ex., Siliguri, Final Order No. 75084 of 2026 dated 20.01.2026 in Service Tax Appeal No. 76615 of 2025. In that case, the Tribunal had set aside a Service Tax demand raised solely on the basis of data received from the Income Tax Department without independent enquiry into the nature of services rendered.
The Tribunal’s reasoning in that decision included reference to M/s. Tabassum Enterprises v Commissioner of CGST&CX, Final Order No. 77452 of 2025 dated 19.09.2025 in Service Tax Appeal No. 75037 of 2025, where the demand had been confirmed on CBDT data without independent or corroborative evidence from Service Tax records.
The Tribunal also referred to M/s. Rishu Enterprise v. Commissioner of C.G.S.T. & C.Ex., Dibrugarh, Service Tax Appeal No. 75509 of 2022, in which it had held that merely on the basis of Form 26AS issued by the Income Tax Department, the Service Tax demand was not sustainable.
Further, reference was made to M/s. Quest Engineers & Consultant Pvt. Ltd. v. Commissioner of C.G.S.T. & C.Ex., Allahabad, reported at 2022 (58) G.S.T.L. 345 (Tri-All), where the Tribunal had observed that Form 26AS was not a statutory document for determining taxable turnover under the Service Tax provisions.
Applying the ratio of those decisions, the Tribunal held that the demand against the appellant, based merely on comparison of the figures appearing in the Income Tax Returns and Form 26AS with the Balance Sheet and Profit & Loss Account, was legally unsustainable.
Demand Under Erstwhile Business Auxiliary Service Provisions
The Tribunal considered the second contention concerning the statutory provisions invoked in the Show Cause Notice.
It observed that with effect from 30.06.2012, Service Tax was leviable on all services other than services covered by the Negative List under Section 66D of the Finance Act, 1994. For the period after 30.06.2012, Service Tax was to be demanded under Section 66B of the Finance Act, 1994.
However, according to the Tribunal, the provisions relevant for demanding Service Tax after 30.06.2012 had not been invoked either in the Show Cause Notice or in the impugned order.
The Show Cause Notice had raised the demand for 2014-15 to 2016-17 under the category of business auxiliary service under erstwhile Section 65(19) read with erstwhile Section 65(105)(zzb) of the Finance Act, 1994. The Tribunal found that provisions relating to the levy of Service Tax after 30.06.2012 had not been raised in the Show Cause Notice.
Accordingly, the Tribunal found merit in the appellant’s contention that the Show Cause Notice, issued without invoking the relevant statutory provisions for the period after 30.06.2012, could not sustain the demand for the period from 2014-15 to 2016-17.
Service Tax Demand, Interest and Penalties Set Aside
In view of the above findings, the Tribunal held that the Service Tax demand confirmed in the impugned order was legally unsustainable and set it aside.
As the demand itself did not survive, the Tribunal held that the question of demanding interest or imposing penalty did not arise. The interest and penalties were therefore also set aside.
Final Decision
CESTAT Kolkata set aside the impugned order and allowed the appeal, with consequential relief, if any, as per law.
Cases Discussed
- M/s. Nanu Shome & Co. v. Commissioner of C.G.S.T & C.Ex., Siliguri — Final Order No. 75084 of 2026 dated 20.01.2026 in Service Tax Appeal No. 76615 of 2025 – CESTAT, Kolkata.
- M/s. Tabassum Enterprises v Commissioner of CGST&CX — Final Order No. 77452 of 2025 dated 19.09.2025 in Service Tax Appeal No. 75037 of 2025 – CESTAT, Kolkata.
- M/s. Rishu Enterprise v. Commissioner of C.G.S.T. & C.Ex., Dibrugarh — Service Tax Appeal No.75509 of 2022 – CESTAT, Kolkata.
- 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).
FULL TEXT OF THE CESTAT KOLKATA ORDER
The instant appeal has been filed by Shri Anup Kumar Metya, Vill & PO: Srirampur, P.S. Tamluk, Purba Medinipur, West Bengal – 721 651 [hereinafter referred to as the <appellant=] against the Order-in- Appeal No. 291/HAL/ST/2024-25 dated 12.08.2024 whereby the demand of Service Tax, along with interest and penalties, as confirmed in the Order-in-Original No. 64/AC/Haldia-II/ADJN/2023-24 dated 01.06.2023, has been upheld.
2. The facts of the case are that a Show Cause Notice dated 10.09.2020 was issued to the appellant on the basis of verification of the Income Tax Returns / Form 26AS received from the Income Tax Department vis-à-vis Balance Sheet and Profit & Loss Account submitted by the appellant pertaining to the period from 2014-15 to 2016-17. It was noticed by the Revenue that the appellant had not paid Service Tax amounting to Rs.5,19,009/- (inclusive of cess) under the category of
3. The above Notice was adjudicated by the Ld. Deputy Commissioner (P&V), Central Tax & C.X., Haldia Commissionerate, Kolkata vide the Order-in- Original No. 64/AC/Haldia-II/ADJN/2023-24 dated 01.06.2023 wherein the ld. adjudicating authority has confirmed the demand of Service Tax to the extent of Rs.4,93,426/- (inclusive of cess), along with interest. The ld. adjudicating authority also imposed a penalty equivalent to the amount of tax demanded, as above, under Section 78(1) of the Finance Act, 1994 along with a penalty of Rs.10,000/- under Section 77 of the Finance Act, 1994 read with Section 174 (2) of the Central Goods & Service Tax Act, 2017. 3.1. On appeal, the Ld. Commissioner (Appeals), vide the order impugned herein, has upheld the demand of Service Tax, along with interest and penalties, as confirmed in the Order-in-Original dated 01.06.2023.
3.2. Aggrieved by the confirmation of the above demand of Service Tax, along with interest and penalties, the appellant has filed the present appeal.
4. The Ld. Counsel appearing on behalf of the appellant submits that instant Show Cause Notice has been issued by comparison of third-party data received from the Income Tax Department along with the Balance Sheet and Profit & Loss Account of the appellant. He further submits that for raising the impugned demand, no independent verification has been conducted by the Revenue so as to ascertain the nature of service rendered by the appellant and the liability to Service Tax on the part of the appellant, if any, for such services rendered; no independent investigation has been conducted by the Department at the service receiver’s end either. Accordingly, it is his contention that the entire demand raised and confirmed against the appellant in the present case by solely relying on CBDT data and without conducting any investigation to establish the taxability of the said services, cannot be sustained, as has been held by this Tribunal in a catena of decisions on the issue. 4.1. The Ld. Counsel for the appellant also submitted that in the present proceedings, Service Tax has been demanded from them under the category of
5. On the other hand, the Ld. Authorized Representative of the Revenue reiterated the findings in the impugned order.
6. Heard both sides and perused the records of the case.
7. I find that the demand under dispute in this case has been raised on scrutiny of the Income Tax Returns / Form 26AS of the appellant along with the Balance Sheet and Profit & Loss Account of the appellant for the relevant period. However, I find that the Department has not conducted any independent verification before issuing the Show Cause Notice dated 20.09.2020 for raising the demand of Service Tax, as confirmed in the impugned order. I observe that the appellant was asked to submit information such as Balance Sheet, Profit & Loss Account, etc., vide letter dated 03.10.2019 by the Department, for which the appellant duly submitted the details vide his letter dated 18.10.2019. Service Tax has been demanded in the Show Cause Notice merely by scrutiny of the Balance Sheet, Profit Loss Account, ITR and Form 26AS of the appellant for the period from 2014-15 to 2016-17 (up to June, 2017). For better appreciation of the facts, the table showing the calculation adopted in the Show Cause Notice for arriving at the Service Tax liability of the appellant for the said period is reproduced below: – [ref. page 2 of the Show Cause- cum-demand Notice dated 10.09.2020] 7.1. From the Table reproduced above, it is clear that the Show Cause Notice has been issued in this case solely on the basis of comparison between the ITR / Form 26AS and the Balance Sheet and Profit & Loss figures. No independent verification has been conducted by the Department and no corroborative evidence has been adduced by the Department in support of the above demand raised either. It has been held in a catena of decisions that a demand raised solely on CBDT data without conducting any independent verification so as to establish the nature of service rendered or the taxability, if any, in respect of the such services, is not sustainable in law. In this connection, I find it relevant to refer to the decision of this Bench in the case of M/s. Nanu Shome & Co. v. Commissioner of C.G.S.T & C.Ex., Siliguri [Final Order No. 75084 of 2026 dated 20.01.2026 in Service Tax Appeal No. 76615 of 2025 – CESTAT, Kolkata], wherein the Service Tax demand raised against the
[ref. page 2 of the Show Cause-cum-demand Notice dated 10.09.2020]
7.1. From the Table reproduced above, it is clear that the Show Cause Notice has been issued in this case solely on the basis of comparison between the ITR / Form 26AS and the Balance Sheet and Profit & Loss figures. No independent verification has been conducted by the Department and no corroborative evidence has been adduced by the Department in support of the above demand raised either. It has been held in a catena of decisions that a demand raised solely on CBDT data without conducting any independent verification so as to establish the nature of service rendered or the taxability, if any, in respect of the such services, is not sustainable in law. In this connection, I find it relevant to refer to the decision of this Bench in the case of M/s. Nanu Shome & Co. v. Commissioner of C.G.S.T & C.Ex., Siliguri [Final Order No. 75084 of 2026 dated 20.01.2026 in Service Tax Appeal No. 76615 of 2025 – CESTAT, Kolkata], wherein the Service Tax demand raised against the appellant under similar facts and circumstances has been set aside by this Tribunal. The relevant portion of the said Order is reproduced below: –
“8. We find that in the present case, the Revenue has issued the Show Cause Notice demanding Service Tax on the basis of the data received from the Income Tax department. We find that the Revenue has not conducted any independent verification of the nature of the services rendered by the appellant and its Service Tax liability. Evidences available on record indicate that an e-mail dated 16.04.2021 was sent to the appellant seeking some documents. Subsequently, another later dated 21.04.2021 was also sent seeking documents. However, without waiting for the appellant to submit any document, the impugned Show Cause Notice was issued on 28.04.2021, i.e., within a week from the letter dated 21.04.2021, solely on the basis of the data available in Form 26AS received from the Income Tax department. We find that the Revenue has not conducted any independent enquiry to ascertain the nature of services rendered, prior to issue of the Notice.
8.1. A perusal of the said Show Cause Notice clearly reveals that the demand has been raised solely on the basis of the CBDT data, without any independent verification being conducted. For the sake of ready reference, paragraph 2.5 of the said Notice, containing the details of the quantification of the demand, is reproduced below: –
……
8.2. Thus, we agree with the submission made by the appellant that the Show Cause Notice has been issued merely on the basis of the data received from the Income Tax Department, without conducting any independent enquiry, for levy of Service Tax, which is legally not sustainable.
8.3. We find that a similar view has been taken by the Tribunal in the case of M/s. Tabassum Enterprises v Commissioner of CGST&CX [Final Order No. 77452 of 2025 dated 19.09.2025 in Service Tax Appeal No. 75037 of 2025 – CESTAT, Kolkata]. The relevant portion of the said order reads as under: –
“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 demonstrating rendition of taxable service.”
8.4. The said issue has been examined by the Tribunal in the case of M/s. Rishu Enterprise v. Commissioner of C.G.S.T. & C.Ex., Dibrugarh [Service Tax Appeal No.75509 of 2022 – CESTAT, Kolkata] wherein it has been held as follows: –
“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.”
8.5. Further, the same issue has also been dealt with by this Tribunal 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)]. The relevant observation of the Tribunal in the aforesaid case is reproduced below: –
“12. …
….We further find that Form No. 26AS is not a statutory document for determining taxable turnover under the Service the 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.”
8.6. We find that the ratio of the above cited case-laws are squarely applicable to the facts and circumstances of the present case. Accordingly, by applying the ratio of the decisions cited supra, we hold that the demand confirmed in the impugned order, solely on the basis of the CBDT data, without conducting any independent verification to ascertain the nature of the services rendered, is not sustainable. Accordingly, we are of the opinion that the demand of Service Tax confirmed in the impugned order is liable to be set aside on this ground itself.”
7.2. Thus, by applying the ratio of the decision cited supra, I am of the view that the demand raised and confirmed against the appellant in the present case, merely on the basis of comparison of the figures available in the Income Tax Returns / Form 26AS and those in the Balance Sheet and Profit & Loss Account of the appellant, is legally unsustainable.
8. Further, I find that with effect from 30.06.2012, Service Tax is leviable on all services other than the services which are listed in the Negative List provided under Section 66D of the Finance Act, 1994. For the period after 30.06.2012, Service Tax is to be demanded as per the provisions of Section 66B of the Finance Act, 1994. However, I find that the said provisions relevant for demanding Service Tax after 30.06.2012 has not been invoked either in the Show Cause Notice or in the impugned order. A perusal of the Show Cause Notice revealed that the demand has been raised for the period from 2014-15 to 2016-17 under the category of “business auxiliary service” as defined under the provisions of erstwhile Section 65(19) of the Finance Act, 1994 read with erstwhile Section 65(105)(zzb) of the Finance Act, 1994. No provisions relating to the levy of Service Tax after 30.06.2012 have been raised in the Show Cause Notice. Thus, I find merit in the contention of the appellant that the Show Cause Notice issued without invoking the relevant provisions of the statute for the period after 30.06.2012, for raising the demand for the period from 2014-15 to 2016-17 is not sustainable in the eyes of law. Accordingly, I find that the impugned demand is liable to be set aside on this ground as well.
9. In view of the above discussions, I hold that the demand of Service Tax confirmed in the impugned order is legally unsustainable and hence, the same stands set aside.
9.1. As the demand itself does not survive, the question of demanding interest or imposing penalty does not arise. The demand of interest and imposition of penalty are also, therefore, set aside.
10. In the result, I set aside the impugned order and allow the appeal, with consequential relief, if any, as per law.
(Dictated and pronounced in the open court)
