Krish Corporation Vs Commissioner of C.E. & S.T.-Surat-i (CESTAT Ahmedabad)
Demand cannot be raised solely based on the oral statement of witness without any further evidence or corroboration
Summary: In the case of Krish Corporation vs. Commissioner of C.E. & S.T.-Surat-I, the CESTAT Ahmedabad held that tax demands cannot be raised solely on the basis of oral statements without corroborating evidence. The case involved allegations against Krish Corporation for collecting undeclared rent in cash from tenants and evading service tax on the renting of immovable property, classified under Section 65(105)(zzzz) of the Finance Act, 1994. The Revenue Department issued a Show Cause Notice (SCN) based on statements from a few tenants, leading to a tax demand of ₹72,61,747 along with penalties. However, the Tribunal observed that these statements were not backed by tangible evidence, such as rent agreements, cash receipts, or ledger entries, and the witnesses were not cross-examined as required under Section 9D of the Central Excise Act, 1944. The Tribunal emphasized that oral admissions cannot conclusively establish tax liability unless substantiated by additional evidence. It noted that the Revenue Department failed to investigate the actual rent amounts, tenancy periods, or whether all the shops were rented during the disputed period. As a result, the tax demand was significantly reduced to ₹17,82,992, and penalties were waived since the appellant had paid the service tax before the issuance of the SCN. The judgment reinforces the principle that tax demands must be supported by credible and verifiable evidence, a precedent likely to impact similar cases under GST.
