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CESTAT, Kolkata: Tax Demand Basis on 26AS Form Without Investigation is Not Valid

Kolkata CESTAT's Order for M/s. Piyush Sharma

The CESTAT in the case of M/s. Piyush Sharma v. Commissioner of CGST & CX, Patna-I [Service Tax Appeal No.75856 of 2021 dated October 17, 2023] has ruled that the service tax claim, which relies on Form 26AS from the Income Tax Department without any scrutiny, is incorrect.

Key Facts of the Case

M/s. Piyush Sharma, referred to as the Appellant, provided services to telecommunications companies such as Tata Teleservices Ltd., ATC Telecom Pvt. Ltd., ATC Infrastructure Services Pvt. Ltd., and Idea Cellular Infrastructure Ltd. These services included erection, commissioning, installation, completion fitting-out, repair, and maintenance of telecommunication towers, including civil construction work.

The ITD (Income Tax Department) discovered through Form 26AS that the Appellant had received a total sum of Rs. 1,19,67,288/- between 2012-13 and 2016-17, on which tax deducted at source (TDS) was applied by the service recipients. Consequently, a show cause notice was issued to the Appellant on April 23, 2018, demanding payment of service tax.

Another claim was demanded on February 11, 2020, on the grounds of the Best judgment method, for the period of April 2017 to June 2017. The Appellant argued the show cause notice but the demand stated in the notice was upheld against the Appellant in the contended order.

The Appellant filed an appeal and argued that the demand could not be raised solely based on the information in Form 26AS. They further contended that they had received contractual payments for executing “Works Contract Services” and provided supporting documents such as work orders, payment details, copies of invoices, and Form 26AS for appropriate adjudication.

The Department restated the outcomes of the Impugned Order and claimed that the Appellant had not cooperated during the investigation. Therefore, the department had calculated the demand considering Form 26AS.

Read Also: How to Download & Import Form 26AS by Gen Income Tax Software?

Challenges Surrounding Form 26AS

The main question was whether a service tax demand could be raised solely based on Form 26AS without a thorough examination by the Adjudicating Authority.

Decision:

The CESTAT, in Service Tax Appeal No.75856 of 2021, made the following rulings:

Case TitleM/s. Piyush Sharma vs Commissioner of CGST & CX
CitationService Tax Appeal No.75856 of 2021
Date17.10.2023
Name of AppearanceShri N.K.Chowdhury, Shri S.Mukhopadhyay
Kolkata CESTATRead Order
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