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Judgment
P.V. Subba Rao, J
Shri Swatantra Jain, the appellant filed this appeal to assail the order-in-appeal, the impugned order dated 29.12.2017 passed by the Commissioner (Appeals), Indore in which he upheld the order-in-original dated 30.11.2016 passed by the Assistant Commissioner and rejected the appellant’s appeal.
We have heard Shri Ashutosh Upadhyay, learned counsel for the appellant and Ms. Jaya Kumari, learned authorized representative appearing for the revenue and perused the records.
The appellant worked as a commission agent and received commission to sell plots of M/s DHL Infra Bulls International Pvt. Ltd., DHL As per section 65B (44) of the Finance Act, 1994, the Finance Act this activity of providing services of real estate agent falls under the definition of “service”. It was not listed in the negative list of services. As the activity of the appellant fell under the definition of service and it was not in the negative list of services, it was felt that the appellant was liable to pay service tax with interest and that the appellant also rendered himself liable to penalties. Accordingly, a show cause notice dated 01.10.2015 was issued to the appellant covering the period 2010-2011 to 2014-2015. The proposal in the show cause notice was confirmed by the Assistant Commissioner in order-in-original dated 30.11.2016, OIO, which was upheld by the Commissioner (Appeals) through the impugned order.
Learned counsel for the appellant made the following submissions :-
(i) During the period 2010-2011 to 2014-2015 the appellant had rendered services and received amounts and filed income tax returns. M/s DHL deducted TDS (tax deduction at source) from the bills of the appellant which were reflected not its Form 26AS.
(ii) The appellant had claimed refund of the TDS so deducted.
(iii) The total service provided by the appellant never exceeded Rs. 10 lakhs and, therefore, it was entitled the benefit exemption Notification No. 32/2012 and 33/2012-ST. Therefore, it was not liable to pay any service tax. The show cause notice, however, was issued demanding service tax amounting to Rs. 81,718/- along with interest and penalty. This proposal was confirmed by the Assistant Commissioner which was upheld in the impugned order.
(iv) During the period 2012-2013, the appellant had received commission of Rs. 10,49,751/- but the service rendered by it became taxable only from July 2012. If the amount received by the appellant during the year is proportionally reduced the amount received by it during the period when the service was taxable falls below the threshold limit of Rs. 10 lakhs.
(v) Demands cannot be confirmed on the basis of the Form 26AS, therefore, the demand of service tax with interest and penalties deserves to be set aside.
(vi) There was no malafide intention of the appellant and, therefore, extended period of limitation could not be invoked.
(vii) The impugned order may be set aside and the appeal may be allowed.
Learned authorized representative for the Revenue made the following submissions :-
(i) The appellant had provided taxable services and had not paid service tax. He was also not registered with the service tax department. The amounts which the appellant had received exceed Rs. 10 lakhs in a year and, therefore, he was liable to pay service tax.
(ii) The appellant had neither applied for nor obtained the service tax registration nor filed any Service Tax Returns. Under such circumstances, the only option for the department is to find the value of services rendered by the appellant from whatever data was available.
(iii) The department obtained the value of the services rendered by the appellant form his own Form 26AS of the Income Tax. Form 26AS is a compilation of all the amounts deducted at source from an income tax assessee by various persons who paid the amounts to the assessee. This Form indicates the total amounts paid and amount deducted as TDS and amounts credited as tax.
(iv) The amount deducted at source will get set off against the income tax liability of the assessee during the year with appropriate adjustments/refund of income tax.
(v) The fact that refund of the amounts deducted as TDS was claimed by the appellant is, therefore, irrelevant insofar as the service tax is concerned. The undisputed position is that the appellant was paid the amounts indicated in the TDS return by DHL. It is also undisputed that the appellant had no other service nor had it received other form of income from DHL. Therefore, the entire amount which DHL had paid to the appellant during the relevant period was towards commission only.
(vi) The service tax was assessed based on the amount paid by the DHL and, therefore, the demands were correctly calculated by the Assistant Commissioner whose order was correctly upheld in the impugned order.
(vii) In view of the above, the appeal may be dismissed.
We have considered the submissions from both sides.
The submission of the learned counsel that the amounts deducted as TDS were subsequently adjusted towards the tax liability of the appellant or is refunded by the Income Tax Department is irrelevant. What is important is how much amount was paid by DHL to the appellant and if it paid the appellant for rendering a taxable service or not.
On a specific query from the bench, learned counsel for the appellant fairly agreed that the appellant had no other business during the relevant period other than as the commission agent of M/s DHL. Therefore, it emerges that the amounts received by the appellant from DHL were solely for the purpose of rendering services as a commission agent. This service was a taxable service both before and after the negative list regime, i.e. during the entire period of dispute.
The contention of the learned counsel for the appellant is that the demand cannot be raised only on the basis of Form 26AS. It is true that service tax cannot be demanded solely on the ground that an amount is mentioned as having been paid to the appellant in Form 26AS. However, if the appellant had not filed any returns and was also not registered with the service tax department, Form 26AS does provide an important source of information on the amounts paid to the appellant. If the amounts paid to the appellant as reflected in Form 26AS were for any other purpose, other than rendering a taxable service, such amounts cannot be included to demand service tax. In this case, the undisputed fact is that all the amounts paid by M/s DHL to the appellant as reflected in Form 26AS were towards rendering its services as the commission agent only. Therefore, service tax was correctly demanded on the amounts so received.
The submission of the learned counsel for the appellant that the amounts paid to it during 2012-2013 must be proportionately reduced and a lesser amount should be reckoned as having been received during July 2012 to March 2013 cannot be accepted in the absence of any supporting evidence.
In view of the above, we find that the impugned order is correct and proper and calls for no interference. The impugned order is upheld and the appeal is dismissed.
(Order pronounced in open court on 16/12/2024.)