Manoj Kumar Anand Vs Commissioner of Central GST and Central Excise (CESTAT Delhi)
Summary: The Customs, Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi, in Manoj Kumar Anand v. Commissioner of Central GST and Central Excise, Jodhpur, Service Tax Appeal No. 54683 of 2023, Final Order No. 51602/2025 dated 17 October 2025, allowed the assessee’s appeal and set aside a service tax demand of ₹5,37,392 together with consequential interest and penalties. The dispute arose from information collected by the department from income-tax records and Form 26AS. The department alleged that the appellant received commission income during financial years 2015-16 to 2017-18 and was consequently liable to pay service tax. The appellant disputed the very nature of the receipts, maintaining that the amounts represented consideration for pandal, shamiana and catering services rather than commission.
The department examined receipts of ₹17,16,300 for FY 2015-16, ₹15,37,300 for FY 2016-17 and ₹14,62,500 for FY 2017-18. A show cause notice dated 14 September 2020 proposed recovery of service tax amounting to ₹5,37,392, together with interest and penalties. The demand was confirmed by the original adjudicating authority and subsequently upheld by the Commissioner (Appeals). Before the Tribunal, the appellant submitted that no documentary evidence established the receipt of commission or deduction of tax under Section 194H of the Income-tax Act, 1961. The appellant also contended that the services involved pandal and shamiana arrangements and catering, including transfer of goods, for which applicable abatement reduced the taxable turnover below the ₹10 lakh exemption threshold. Accordingly, the appellant had not obtained service tax registration.
The Tribunal observed that the department’s entire case rested on income-tax information and Form 26AS without independent proof of the taxable service allegedly rendered. Even the documents relied upon by the department did not establish that tax had been deducted under Section 194H. The Revenue failed to produce agreements, invoices or other evidence demonstrating that the receipts constituted commission. The Tribunal held that the burden of establishing the taxable nature of the transaction rested upon the department. Referring to judicial precedents, including Jai Prakash Industries Ltd. and Commissioner of Customs v. Dilip Kumar & Company, it concluded that the demand could not be sustained merely on presumptions arising from income-tax records. The department had also failed to rebut the appellant’s explanation regarding pandal, shamiana and catering services and the applicable abatement.
The Tribunal separately examined the question of limitation. The show cause notice dated 14 September 2020 covered the period from April 2015 to June 2017 and invoked the extended period under the proviso to Section 73(1) of the Finance Act, 1994. The Tribunal held that the department had failed to establish fraud, wilful misstatement or suppression of facts. The appellant’s explanation that it believed the turnover to be below the taxable threshold after abatement had not been disproved. Relying on the Supreme Court’s decisions in Chemphar Drugs & Liniments and Gopal Zarda Udyog, the Tribunal reiterated that mere inaction or non-registration was insufficient to invoke extended limitation without evidence of deliberate withholding of information or intent to evade tax.
Accordingly, the Tribunal held that the demand was unsustainable both on merits and on limitation. The order passed by the Commissioner (Appeals) was set aside and the appeal was allowed. The decision reinforces the requirement that service tax liability must be established through evidence of identifiable taxable services and consideration, rather than inferred solely from income-tax records, and that extended limitation requires proof of the statutory ingredients of suppression or wilful misstatement.
Cases Discussed
1. Warsi Buildcon v. Principal Commissioner of Customs, Central Excise and Service Tax, New Delhi, (2024) 17 Centax 37 (Tri.-Del.) (CESTAT New Delhi) — Cited by the Revenue in support of its defence of the confirmed demand and invocation of extended limitation.
2. Hakim Singh Contractor v. Commissioner of CGST, Customs and Central Excise, Alwar, Final Order No. 51645/2023 dated 16.11.2023 (CESTAT New Delhi) — Relied upon by the departmental representative while defending the extended period of limitation.
3. Rajesh v. Assistant Commissioner of CGST & Central Excise, Chennai, 2023 (386) ELT 728 (Madras High Court) — Cited by the Revenue in support of the impugned proceedings.
4. R.K. Singh & Co. v. Commissioner of Customs, Central Excise, Raipur, 2023 (5) TMI 721 (CESTAT New Delhi) — Cited by the appellant in support of its challenge to the service tax demand.
5. Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company, 2018 (361) ELT 577 (Supreme Court) — Relied upon by the Tribunal concerning the burden of establishing tax liability and interpretation of taxing provisions. The decision also distinguishes ambiguity in charging provisions from ambiguity in exemption notifications.
6. Uniworth Textiles Ltd. v. CCE, Raipur, 2013 (288) ELT 161 (Supreme Court) — Cited by the appellant on the requirement to establish deliberate suppression or misstatement for invoking the extended limitation period.
7. Pushpam Pharmaceuticals Co. v. CCE, Bombay, 1995 (78) ELT 401 (Supreme Court) — Cited by the appellant concerning the meaning of suppression and the conditions for invoking extended limitation.
8. Sarabhai M. Chemicals v. CCE, Vadodara, 2005 (179) ELT 3 (Supreme Court) — Relied upon by the appellant in support of the limitation challenge.
9. Jai Prakash Industries Ltd. v. Commissioner of Central Excise, 2002 (146) ELT 481 (Supreme Court) — Referred to by the Tribunal while rejecting a demand based exclusively on uncorroborated income-tax information.
10. CCE v. Chemphar Drugs & Liniments, 1989 (40) ELT (Supreme Court), as cited in the order — Relied upon by the Tribunal for the proposition that the extended limitation period requires positive evidence of conscious and deliberate withholding of information.
11. Gopal Zarda Udyog v. CCE, Delhi, 2005 (188) ELT 251 (Supreme Court) — Referred to by the Tribunal as reaffirming the requirement for establishing deliberate suppression when extended limitation is invoked.
FULL TEXT OF THE ORDER OF CESTAT NEW DELHI
Present appeal is filed to assail Order-in-Appeal No. 125/2022 dated 14.12.2022 vide which the service tax demand has been upheld holding that the appellant is receiving commission against rendering the taxable service.
2. The department got the details of amount received by the appellant/service provider during the Financial Year 2015-16 and 2017-18 from the income tax returns filed by the appellant under Section 194H of Income Tax Act, 1961. Vide letter dated 30.08.2019, the appellant was required to file the supporting documents/financial records for the said period which were submitted by the appellant vide its letter dated 04.11.2019. On examination of those documents, department found that the appellant has received an amount of Rs.17,16,300/- during Financial Year 2015-16, Rs.15,37,300/- during Financial Year 2016-17 and Rs.14,62,500/- during Financial Year 2017-18 against the sale of services alleging the said amount to be received as commission from various recipients. The appellant was alleged liable to pay service tax on the said amount. Accordingly, vide Show Cause Notice No. 13/2020 dated 14.09.2020 service tax amounting to Rs.5,37,392/- was proposed to be recovered along with the proportionate interest and appropriate penalties. The said proposal was initially confirmed vide Order-in-Original No. 07/2021 dated 04.10.2021. Appeal against the said order has been rejected vide the impugned Order-in-Appeal. Being aggrieved, the appellant is before this Tribunal.
3. I have heard Shri Jitin Singhal, learned Advocate for the appellant and Shri Rohit Issar, learned Authorized Representative for the department.
4. Learned counsel for the appellant has submitted that the demand has wrongly been confirmed against the appellant. There is no evidence produced by the department to show that the income received by the appellant was towards commission and TDS has been deducted under Section 194H of the Income Tax Act. On the contrary, it is apparent from Form 26 AS itself for the disputed period, that no amount was deducted under Section 194H of the said Act. The authorities have not considered the documents provided by the appellant. The entire case is based on the presumptions. It is submitted that the income received by the appellant during the disputed period was the amount of consideration received for rendering activity of pandal/shamina and catering services. The said activity was not taxable as after abatement, the amount becomes less than Rs. 10 lakhs. Because of the said exemption appellant has not taken the service tax registration. Learned counsel has relied upon the following decisions:
(i) Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar & Company reported as 2018 (361) ELT 577 (SC)
(ii) R.K. Singh & Co. Vs. Commissioner of Customs, Central Excise, Raipur reported as 2023 (5) TMI 721 – CESTAT New Delhi
4.1 Finally it is submitted that the show cause notice is barred by time as there is no evidence adduced by the department to prove the allegations of suppression and misstatement. On the contrary, appellant was under bona fide belief that there is no liability of tax. Learned counsel has relied upon the following decisions:
(i) Uniworth Textiles Ltd. Vs. CCE, Raipur reported as 2013 (288) ELT 161 (SC)
(ii) Pushpam Pharmaceuticals Co. Vs. CCE, Bombay reported as 1995 (78) ELT 401 (SC)
(iii) Sarabhai M. Chemicals Vs. CCE, Vadodara reported as 2005 (179) ELT 3 (SC)
With these submissions, the order under challenge is prayed to be set aside and appeal is prayed to be allowed.
5. While rebutting these submissions learned Departmental Representative has mentioned that appellant has throughout been non cooperative. Except submitting certain documents not even reply to show cause notice was filed by the appellant. The Order-in-Original was also passed ex parte. Thus, there was no evidence produced by the appellant to falsify the allegations. No evidence has been produced to show that the appellant was engaged in the pandal/shamina and catering services. Hence there is no infirmity in the order under challenge.
5.1 While submitting the plea of invocation of extended period of limitation, learned Departmental Representative has mentioned that the appellant has not been registered with the service tax department. No returns were filed by the appellant. Thus, there was no information with the department till the investigation started. The sole motive of non-payment of tax is the evasion thereof. In the absence of any evidence to prove the bona fide of the appellant, there is no infirmity when the extended period of limitation has been invoked. Learned Departmental Representative has relied upon the following decisions:
(i) Rajesh Vs. Assistant Commissioner of CGST & Central Excise, Chennai reported as 2023 (386) ELT 728 (Mad.)
(ii) Hakim Singh Contractor Vs. Commissioner of CGST, Customs and Central Excise, Alwar vide Final Order No. 51645/2023 dated 16.11.2023 (Tri.-Delhi)
(iii) Warsi Buildcon Vs. Principal Commissioner of Customs, Central Excise and Service Tax, New Delhi reported as (2024) 17 Centax 37 (Tri.-Del)
With these submissions, the appeal is prayed to be dismissed.
6. Having heard both the sides and perusing the records.
7. It is observed to be an apparent fact that the impugned demand was based on the data received from the income tax department in the form of income tax returns and Form 26 AS. Law has now been settled that the demand cannot be confirmed based on Form 26 AS only. We draw our support from the decisions of Hon’ble Supreme Court in the case of Jai Prakash Industries Ltd. Vs. Commissioner of Central Excise reported as 2002 (146) ELT 481 (SC). Hon’ble Supreme Court also in Dilip Kumar & Company (supra) case has held that the interpretation of taxing statute imposing tax liability on the assessee, the burden to prove the same lies on the Revenue. It has also been elaborated that in case of any ambiguity in a taxing statute imposing tax liability on the assessee benefit of doubt has to be given to the assessee.
8. It is further observed that while discharging the said onus department has not produced any evidence on record. Even the Income Tax Returns and Form 26 AS does not support the departments allegation as no TDS is shown deducted in the said documents. The sole basis for confirmation of the impugned demand is the tax deduction (TDS) under Section 194H of the Income Tax Act. Based whereupon the amount received by the appellant is alleged to be an amount of commission. When there is no evidence of TDS being deducted, the entire basis for confirmation of demand is absolutely redundant. There is nothing on record to falsify that the appellant is the service provider for pandal/shamina and catering services. There is also no denial of the fact that while providing these services there is a transfer of goods involved. In these circumstances, the appellant was otherwise entitled for the abatement. The impugned demand has included the entire amount received by the appellant. These observations are sufficient to hold that the confirmation of demand is not sustainable.
9. Finally coming to the plea of limitation, it is observed that the show cause notice dated 14.09.2020 has proposed the demand for the period from April 2015 to June 2017. Apparently the show cause notice has proposed the demand for the period beyond the normal period. There is nothing on record to prove the alleged suppression or misstatement. It is the submission on behalf of the appellant that the appellant was entitled to abatement due to which his income was under exempted limit and accordingly he had not taken the service tax registration. Department has not produced any evidence to show that the income received by the appellant was more than the exempted limit of Rs.10 lakhs. In these circumstances, it is held that proviso to Section 73(1) of the Finance Act, 1994 has wrongly been invoked for issuing the show cause notice for the extended period of limitation. The show cause notice is therefore held to be barred by time. I draw my support from the decision of Hon’ble Apex Court in the case of CCE Vs. Chemphar Drugs & Liniments resported as 1989 (40) ELT (SC), where it was held as follows:
“Extended period is applicable only when something positive other than mere in action or failure on the part of the manufacture is proved. Conscious and deliberate withholding of the information by manufacturer is necessary for invoking the extended period. If the department had full knowledge or the manufacturer had reasonable belief that he is not required to give a particular information, only normal period of limitation i.e. one year is applicable.”
The view was reiterated by the Apex Court in the case tiled as Gopal Zarda Udyog Vs. CCE, Delhi reported as 2005 (188) ELT 251 (SC).
10. In light of the entire above discussion, the order challenge is hereby set aside. Consequent thereto, the appeal is allowed.
