Receipts established as payments for the supply of goods, corroborated by VAT assessments, are not subject to service tax, and service providers are entitled to threshold exemptions under Service Tax notifications if their taxable turnover remains below the prescribed limit of Rs. 10 Lakhs.

SANJIV SRIVASTAVA:

This appeal is directed against Order-in-Appeal No.757-ST/Alld/2022 dated 27/02/2023 passed by Commissioner (Appeals) Customs, Central Excise & Service Tax, Allahabad. By the impugned order following has been held:-

“5. In view of the above, I modify the impugned Order dated 26.05.2022, as under:

(i) Confirm demand of Service Tax (including Cesses) is reduced to Rs. 60,676/-along with interest;

(ii) Imposition of penalty under Section 78 of the Act is reduced to Rs. 60,676/-.

(iii) Penalty imposed under Section 77(1) (a) 77(1) (c) 77(1) (d), 77(2) and under Section 70 of the Ace read with Rule 7(C) of the Service Tax-Rules, 1994 in the impugned order shall remain unchanged.”

1.2 Earlier appeal filed by the appellant was dismissed on the ground of maintainability as the disputed amount of service tax involved in the appeal is Rs.60,676/-, much below the amount of Rs.2 lakhs as per second proviso to Section 35B(1). However, Hon’ble High Court vide order dated 27.01.2026 in Central Excise Appeal No 3 of 2026 remanded the matter to the Tribunal.

2.1 Appellant is engaged in providing taxable services as defined by Section 65B(44) of the Finance Act, 1994 and are liable to pay service tax as per the provisions of Section 66B ibid. Appellant had not obtained Service Tax Registration as required under Section 69 of the Finance Act, 1994.

2.2 On the basis of the information received from Income Tax Department, it was observed that appellant has provided taxable services during the F.Y. 2015-16 but have not paid due service tax.

2.3 Inquiries were initiated and appellant vide letter dated 07.11.2019 was asked to provide the documents i.e. Form ST-2; details of nature of work/services provided; ST-3 returns, Bills Invoice/ Job-work bills issued towards services provided, Form 26AS, Balance Sheets along with Profit & Loss A/c, Income Tax returns along with computation/calculation of Income: Reconciliation of amount received under different Sections of Income Tax [excluding Sec 194A] in Form-26AS vis-à-vis taxable value of services reflected in ST-3 returns along with reasons for difference, if any, Reconciliation of amount reflected under the head of 'Revenue from Operations' in Balance sheet/Computation of Income vis-à-vis taxable value of services reflected in ST-3 returns along with reasons for difference, if any and any other relevant related documents in respect of service provided for the period from April. 15to June, 17.

2.4 Appellant vide letter dated 23.12.2019 submitted that during the relevant period they have received works contract for services provided by way of construction of road which are exempt from payment of service tax, the same are reproduced as under-

2.5 Further, correspondences were made and appellant was asked to provide Work orders/ Contracts/ Agreements made with the service recipients. However, no response was received. Hence, appellant failed to produce other related records duly maintained by them during their business activities. Accordingly, on the basis of available information provided by the Income Tax Authorities, appellant short paid service tax has been computed as detailed in tables below:-

Service Tax Payable