Manoj Kumar Vs Commissioner of CGST & Central Excise (CESTAT Kolkata)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, allowed the appeal against an order confirming service tax demand for the period 2015-16. The appellant had been issued a show cause notice dated 24.12.2020 demanding ₹18,33,958 by invoking the extended period of limitation. The Adjudicating Authority confirmed the demand. On appeal, the Commissioner (Appeals) partly allowed the appeal by setting aside a portion of the demand but sustained a demand of ₹9,98,468 along with interest and penalty. The appellant challenged the remaining demand before the Tribunal.
The Tribunal noted that part of the demand related to receipts reflected in Form 26AS in the name of Aditya Enterprise. The appellant had contended that Aditya Enterprise was his proprietary concern. The Commissioner (Appeals) had held that there was no material to establish that Aditya Enterprise belonged to the appellant. However, the Tribunal found that the appellant had produced, at page 34 of the appeal paper book, a Chartered Accountant-certified statement of assets and liabilities showing that Manoj Kumar was the proprietor of Aditya Enterprise. The Tribunal held that this document established the proprietorship and observed that the confirmed demand had been sustained only because the Commissioner (Appeals) was unable to ascertain this fact. On that ground alone, the Tribunal held that the confirmed demand was liable to be set aside.
The Tribunal further observed that it had consistently held that service tax demands raised solely on the basis of Form 26AS data are not legally sustainable. Referring to its earlier decisions, it noted that demands based only on information received from the Central Board of Direct Taxes (CBDT), without independent or corroborative evidence from service tax records establishing rendition of taxable services, could not be sustained. It also referred to decisions holding that Form 26AS is not a statutory document for determining taxable turnover under the Finance Act, 1994, and that indiscriminate issuance of show cause notices based merely on differences between Income Tax and Service Tax data was contrary to CBIC instructions requiring proper verification and reconciliation before issuance of notices.
Following the ratio laid down in the cited decisions, the Tribunal set aside the impugned order. It also held that the demand was time-barred. Consequently, the appeal was allowed with consequential relief, if any, in accordance with law.
Cases Discussed
- Homeopathic Medical Publishers Vs Commissioner of CGST & Central Excise, FINAL ORDER NO. 86910/2025 dated 25/11/2025
- Tabassum Enterprises vs. C, CGST & CX, Final Order No.75452/2025 dated 19.09.2025 (Service Tax Appeal No.75037 of 2025)
- Nimeshbhai Gunvantbhai Patel v. Union of India (Gujarat High Court), (2024) 25 Centax 122 (Guj)
- M/s. Rishu Enterprise vs Commissioner of C.G.S.T. & Excise, Dibrugarh (CESTAT, Kolkata), Final Order No. 75177 of 2024 dated 08.02.2024 in Service Tax Appeal No. 75509 of 2022
- M/s. Quest Engineers & Consultant Pvt. Ltd. v. Commissioner of C.G.S.T. & C.Ex., Allahabad (CESTAT Allahabad), 2022 (58) G.S.T.L. 345 (Tri. – All.)
- Shubham Electricals v. Commissioner of Central Excise & Service Tax, Rohtak (CESTAT Delhi), 2015 (40) STR 1034 (Tri.-Del.)
- Commissioner of Customs (Imports), Chennai v. Flemingo (DFS) Pvt Ltd (Madras High Court), 2010 (251) ELT 348 (Mad)
FULL TEXT OF THE CESTAT KOLKATA ORDER
No one has appeared on behalf of the appellant. Finding that the issue is in a short compass, I have taken up the Appeal itself with the help of the Ld A R.
2. The appellant was issued a Show Cause Notice on 24.12.2020 for the services renderd by him during the period 2015-16. The Show Cause Notice demanded Rs.18,33,958 by invoking the extended period provisions. After due process, the Adjudicating Authority has confirmed the demand. On appeal Commissioner (Appeal) has considered the documentary evidence placed by the appellant and has set aside part of the demand and has confirmed the demand of Rs.9,98,468/- along with interest and penalty. Being aggrieved the appellant is before the Tribunal.
3. On going through the records, I find that for the consideration shown in the Form 26AS in respect of Aditya Enterprise, the same was claimed by the appellant that the firm belongs to him as the proprietor. The Commissioner (Appeal) has given a finding that there is no record to establish that Aditya Enterprise belongs to the appellant. I find that at page 34 of the appeal book, the appellant has enclosed a copy of the Asset and Liabilities details wherein it is shown that the present appellant Manoj Kumar is the proprietor of the Aditya Enterprise. The same is certified by the Chartered Accountant. This copy is extracted below:
4. Therefore, the present demand has been confirmed only on the ground that the Commissioner (Appeal) was not in a position to ascertain the information as to whether Manoj Kumar is the proprietor of Aditya Enterprise or not and the same stands proved by way of the above CA’s certificate. Therefore, the confirmed demand gets set aside on this ground itself.
5. Further I find that the Tribunal has been consistently holding that when the Show Cause Notice is issued purely based on Form 26 AS of Income Tax, the demand is not legally sustainable.
6. I have for reference “For reference the following case law Tabassum Enterprises vs. C, CGST & CX vide Final Order No.75452/2025 dated 19.09.2025 (Service Tax Appeal No.75037 of 2025) has held 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 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 Tribunal has 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.”
5.6. 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.”
7. It would also be relevant to go into the decision of Mumbai Bench on this issue :
Homeopathic Medical Publishers
Vs Commissioner of CGST & Central Excise
FINAL ORDER NO: _86910/2025
dated 25/11/2025
“3. Learned Chartered Accountant also placed reliance on the decision of Hon’ble High Court of Gujarat in Nimeshbhai Gunvantbhai Patel v. Union of India [(2024) 25 Centax 122 (Guj)] and several decisions of the Tribunal invalidating proceedings commenced with no allegation other than discrepancy between returns filed under the Finance Act, 1994 and under Income Tax Act, 1961 respectively. Relying upon the decision of the Hon’ble High Court of Madras, in Commissioner of Customs (Imports), Chennai v. Flemingo (DFS) Pvt Ltd [2010 (251) ELT 348 (Mad)], and of the Tribunal, in Shubham Electricals v. Commissioner of Central Excise & Service Tax, Rohtak [2015 (40) STR 1034 (Tri.-Del.)], it was submitted that proceedings initiated by show cause notice which did not lay out specific identification of chargeability to levy on identified taxable activity was invalid in law.
6. It would appear that the initiation of recovery proceedings under section 73 of Finance Act, 1994 solely on the basis of information received from third parties was so rampant and undesirable that the Central Board of Indirect Taxes & Customs (CBIC), vide circular dated 26th October 2021, instructed that :
„2. In this regard, the undersigned is directed to inform that CBIC vide instructions dated 01.04.2021 and 23.04.2021 issued vide F.No.137/472020-ST, has directed the field formations that while analysing ITR-TDS data received from Income Tax, a reconciliation statement has to be sought from the taxpayer for the difference and whether the service income earned by them for the corresponding period is attributable to any of the negative list services specified in Section 66D of the Finance Act, 1994 or exempt from payment of Service Tax, due to any reason. It was further reiterated that demand notices may not be issued indiscriminately based on the difference between the ITR-TDS taxable value and the taxable value in Service Tax Returns.
3. It is once again reiterated that instructions of the Board to issue show cause notices based on the difference in ITR-TDS data and service tax returns only after proper verification of facts, may be followed diligently. Pr. Chief Commissioner /Chief Commissioner (s) may devise a suitable mechanism to monitor and prevent issue of indiscriminate show cause notices. Needless to mention that in all such cases where the notices have already been issued, adjudicating authorities are expected to pass a judicious order after proper appreciation of facts and submission of the noticee.‟
7. The Hon’ble High Court of Gujarat, in re Nimeshbhai Gunvantbhai Patel, has held, in like circumstances and after narration of reconciliation offered by assessee, that
„16. …Therefore, considering the facts on record it is evident that the petitioner was not at all liable for service tax and the respondent authorities could not have assume the jurisdiction to issue the show cause notice on the basis of the data provided by the Income Tax Department in Form-26AS and thereafter failed to consider the details provided by the petitioner in reply to the show cause notice.
17. It is also pertinent to note that no justification is given in the impugned show cause notice as well as the order-in original for assumption of jurisdiction by invoking extended period of 5 years under the proviso to subsection-1 of section 73 of the Finance Act, 1994.
18. In view of the foregoing reasons, the impugned show cause notice is not tenable as the same is issued without jurisdiction and consequently the order-in-original also would not survive….‟
8. In view of our findings supra and the decisions aforesaid, the lack of allegation in the show cause notice, that any, or even part, of the impugned income was not attributable to any of the claimed activities, places the invoking of section 73 of Finance Act, 1994 in jeopardy at the threshold itself. It would appear that the adjudicating authority was influenced almost entirely by the additional income reported in returns prescribed in another jurisdiction.
9. In view of the above, we set aside the impugned order and allow the appeal.”
8. Following the ratio laid down in the cited case laws, I set aside the impugned order even on account of time barred.
10. The appeal stands allowed with consequential relief, if any, as per law.
(Operative part of the order was pronounced in open court)
