Santosh Pal Contractor Vs Commissioner of Central Excise & CGST (CESTAT Allahabad)
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Allahabad Bench, in the case of Santosh Pal Contractor Vs Commissioner of Central Excise & CGST, ruled that a Service Tax demand cannot be sustained when it is based solely on data from the Income Tax Return (ITR) and Form 26AS without independent verification and finding that the entire reported income was exclusively for the provision of taxable services. Consequently, CESTAT quashed the Service Tax demand, primarily on the ground of limitation.
Key Issue and Facts
The Service Tax Department initiated proceedings against Santosh Pal Contractor (the Appellant) for the financial year 2016-17, alleging he was providing taxable services without registration or payment of Service Tax. The department’s case was built on information from the Income Tax Department (TDS data in Form 26AS and figures from the Profit & Loss Account in the ITR), which showed gross receipts of over crores.
The initial Show Cause Notice (SCN) proposed a demand of based on the amount reflected in the Profit & Loss Account, adjusted downwards to based on an inquiry revealing payments from a Nagar Panchayat for the construction of a guest house.
