Demand of service tax based on Income Tax Returns

PJ/Case Laws/2011-12/1431

Demand of service tax based on Income Tax Returns - Appeallate forum

Case: COMMR. OF S.T., BANGA LORE versus ALP MANAGEMENT CONSULTANTS P. LTD.

Citation: 2011 (24) S.T.R. 287 (Kar.)

Issue:- Appeal filed before the High Court on issue of Demand of service tax based on Income Tax Returns – held: Question not related to rate of excise duty or value of goods for assessment – appeal lies to Apex Court.

Brief Facts:- Demand of service tax was raised against the respondent-assessee based on the Income Tax returns filed by them.

The Tribunal held that service tax cannot be recovered based on the returns shown in the income tax returns, as the provisions of income tax requires declarationof amounts still due from the debtors, while in the case of service tax, the same has to be paid when recoveries are made. Reliance was placed on the decision given in M/s Tempest Advertising (P) Ltd [2007 (5) STR 312 (Tribunal)]. The demand against the respondent was set aside also on the ground that there is no suppression of facts and the demand was time-barred.

Against the judgment of the Tribunal, Revenue has filed appeal before the High Court.

Respondent’s Contention:- Respondent-assessee contended that the amounts declared in the income tax returns cannot be made basis for levying the service tax. Therefore, the question involved in this appeal is regarding the valuation as well as the liability to pay service tax on the mount shown in the income tax returns.

Reasoning of Judgment:- The High Court held that this appeal is filed under Section 35G of the Central Excise Act, 1944. The said question falls squarely within the exception carved out in Section 35G, 'not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment', and the High Court has no jurisdiction to adjudicate the said issue, as held by the High court in the case of Commissioner of Central Excise v. M/s. Mangalore Refineries and Petro Chemicals Limited, in CEA No. 6/2007 disposed off on 1-9-2010 [2011 (270) E.L.T. 49 (Kan)]. The appeal lies to the Apex Court under Section 35L of the Central Excise Act, 1944, which alone has exclusive jurisdiction to decide the said question. Appeal is not maintainable, reserving liberty to the Revenue to approach the Apex Court.

Decision:- Appeal rejected.

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PJ/Case Laws/2011-12/1431

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