Case Law Details
Gautam Bhattacharya Vs Commissioner of Central Tax (CESTAT Bangalore)
Brief facts of the case are that the appellants are the partners of partnership firm namely M/s. Ernst & Young, LLP. The appellants had filed their income tax returns showing components such as ‘sale of services’, against which partners have shown certain amount received from the partnership firm as their income. The said income tax returns were supplied to the authorities below, who after examining the same raised a query to the appellants, why not on account of sale of service be taxed under the Finance Act, 1994.
Appellants submits that appellants are partners of partnership firm and they received certain remuneration and distribution of profit and same amount is shown as profit in their income tax returns. The said amount is nothing but a remuneration received as a partner of the partnership firm and they have not provided any service to anybody else except to their partnership for which they are the owners. In that circumstance, no service tax is payable by the appellant.
CESTAT held that the service recipient at the best in this case is only a partnership firm. The partner of a partnership firm is none other than the same, therefore, one would cannot provide service to oneself. As there is no recipient of service in this case, no service has been provided by the appellant. In the income tax returns, the figures shown by the appellants as sale of service is just a portion of the profit earned by them from the partnership firm. In that circumstance, on merits itself, the appellants are not liable to pay service tax.
FULL TEXT OF THE CESTAT BANGALORE ORDER
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THIS TRIBUNAL DECISION IS ONE MORE CLASSICAL EXAMPLE OF HARASSMENT CREATED BY THE GOVERNMENT OFFICERS. THE WAS A PARTNER IN A BIG B FIRM AND THEREFORE HAD ALL THE RESOURCES TO CONTEST THE MATTER. AN ORDINARY TAXPAYER WOILD HAVE EOTHER SETTLED THA MATTER WITH BRIBE OR WOULD HAVE FACED EXREME HARASSMENT AND UNBEARABLE LEGAL EXPENSES.