Service tax demand cannot be sustained solely on Form 26AS without proving the underlying taxable service.

The appellant, Smt. Anju Makhija, was alleged to have provided taxable services without obtaining service-tax registration or paying service tax. Based principally on information obtained from the Income Tax Department, including Form 26AS and income-tax returns, the Department treated receipts of ₹1,40,65,334 as taxable consideration for 2013–14 to 2015–16.

A show-cause notice dated 22 October 2018 proposed service-tax demand of ₹19,72,702, interest under Section 75, and penalties under Sections 77 and 78 of the Finance Act, 1994. The demand was confirmed by the adjudicating authority and upheld in appeal.

Before the Tribunal, the appellant contended that the receipts represented: (i) trading/sale proceeds of M/s Shri Sawariya Traders, with which she was not shown to be connected; and (ii) rent from immovable properties used as residential hostels, which was non-taxable. She further challenged the demand as being based merely on Form 26AS and contended that the extended limitation period was incorrectly invoked.

1. Whether the trading or sale receipts could be treated as consideration for taxable services provided by the appellant under Section 65B(44) of the Finance Act, 1994.

2. Whether the rent received from immovable property used as a hostel/residential dwelling constituted taxable renting of property or was excluded from taxable services as renting of a residential dwelling for use as a residence.

3. Whether service-tax liability could be confirmed solely on the basis of Form 26AS or income-tax information without establishing the nature of the service, the service provider and recipient, and the consideration for such service.

4. Whether the extended period of limitation was validly invoked in the absence of evidence of fraud, wilful misstatement, suppression of facts, or an intent to evade tax.

The Tribunal applied Section 65B(44) of the Finance Act, 1994, which defines “service” but excludes transfer of title in goods or immovable property by sale and transactions deemed to be sales under Article 366(29A) of the Constitution.

It also applied Section 66D(m), under which renting of a residential dwelling for use as a residence was outside the scope of taxable services during the negative-list regime.

The Tribunal relied on the explanation of “residential dwelling” in the CBIC Education Guide dated 20 June 2012 and on Bandu Ravgi N v. Acharya Ratna Desh Bhushan Shikshan Prasark Mandal, which recognised that a hostel may constitute a residential dwelling.

On limitation, it relied on Uniworth Textiles Ltd. v. CCE, Raipur, 2013 (288) E.L.T. 161 (S.C.), for the principle that mere non-payment of duty does not establish suppression or wilful misstatement and that the Department must prove a positive act indicating deliberate evasion.

It further applied the principle that Form 26AS or income-tax returns, without independent evidence identifying the taxable service and its consideration, cannot by themselves sustain a service-tax demand, relying on Manoj Kumar Anand v. Commissioner of Central Excise, Jodhpur and Indian Machine Tools Manufacturers Association v. Commissioner of Central Excise, Panchkula.

The Tribunal found that the Department had not produced evidence connecting the appellant with M/s Shri Sawariya Traders; in any event, receipts from trading or sale were excluded from the statutory definition of “service”.

The rental receipts were held to relate to immovable property used as a hostel/residence. Since renting of a residential dwelling for use as a residence was excluded under Section 66D(m), those receipts were also not taxable.

The Tribunal additionally noted that the appellant had filed written replies and supporting submissions, contrary to the adjudicating authorities’ finding that she had failed to cooperate or provide information.

The Department’s reliance on Form 26AS did not establish the essential elements of a taxable service, namely the precise service rendered, the service provider and recipient, and the consideration paid for that service.

In the absence of evidence of deliberate suppression or wilful misstatement, the extended limitation period was also unavailable.

The demand could not independently be sustained on the basis of Form 26AS, and the extended limitation period was wrongly invoked.

The impugned order was set aside and the appeal was allowed.