Service Tax Cannot Be Demanded on Form 26AS Figures Alone: CESTAT Allahabad

In two appeals, the Customs, Excise and Service Tax Appellate Tribunal, Allahabad set aside service tax demands built only on differences between income tax data and service tax returns, without identifying any taxable service.

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad has set aside two service tax demands raised only on the difference between receipts shown in Form 26AS or income tax returns and the values in service tax returns, holding that the Department must establish a taxable service and cannot invoke the extended period on such data [Gopsons Paper Limited v. Principal Commissioner, CGST, Noida, 2026-juristway.com-3385-CESTAT(Allahabad)-ST; H.D. Carriers Pvt. Ltd. v. Commissioner of Central Excise & CGST, Noida, 2026-juristway.com-3386-CESTAT(Allahabad)-ST].

Both appeals were heard by P.K. Choudhary, Member (Judicial), and K. Anpazhakan, Member (Technical). Form 26AS is the annual statement of tax deducted at source on a taxpayer’s receipts, maintained for income tax purposes.

Gopsons Paper. Mr. Choudhary wrote the order. The company printed books and security labels and paid excise duty on labels. Two show cause notices were decided ex parte. The Tribunal held that printing books amounted to manufacture, and that a process amounting to manufacture was in the negative list under Section 66D(f) of the Finance Act, 1994.

The Tribunal held that service tax must rest on a concrete service transaction and not on assumptions, and that the burden of proving taxability lies on the Department. Apart from the difference between Form 26AS and the service tax returns, the Department had neither shown that any service was rendered nor identified a transaction that escaped tax. The extended period under the proviso to Section 73(1) could not be invoked without a positive act of evasion.

H.D. Carriers. Mr. Anpazhakan wrote the order. The goods transport agency (GTA) faced a demand for 2015‑16 raised by a notice dated 28 Dec 2020 on Form 26AS and income tax data. The Tribunal found that much of the freight was for “specified persons”, on whom tax fell under reverse charge by Notification No. 30/2012‑ST, and that ₹46,48,463 related to transport of fertiliser, manure and oil cakes exempt under Serial No. 21(e) of Notification No. 25/2012‑ST.

Following Tabassum Enterprises v. Commissioner, CGST & CX, Kolkata South (Final Order No. 77452/2025), the Tribunal held that income tax data was always available to the Department, so suppression could not be alleged, and that a demand based solely on such data without independent verification of the services was unsustainable.

Both appeals were allowed, and the demands, interest and penalties were set aside.

2026-juristway.com-3385-CESTAT(Allahabad)-ST | 2026-juristway.com-3386-CESTAT(Allahabad)-ST