Service Tax Demand Based Solely on Form 26AS Quashed by HC

Case Details: Debojit Deb vs. Union of India [2026] 187 taxmann.com 626 (Gauhati)

Judiciary and Counsel Details

Kardak Ete, J.
Ms M.L. Gope, Ms S. Sarkar, S.K. Saha & Ms N. Hawelia, Advs. for the Petitioner
S.K. Medhi, SC for the Respondent.

Facts of the Case

The petitioner was engaged in executing works contracts relating to roads, bridges, and allied infrastructure for Government departments and was registered under the service tax regime. The petitioner claimed exemption in respect of such works contracts provided to Government entities under Notification No. 25/2012-ST. However, the Department initiated service tax proceedings solely on the basis of data reflected in Income-tax Form 26AS and confirmed the demand by invoking the extended period of limitation under Section 73 of the Finance Act, 1994, along with Section 142 of the CGST Act and the Assam GST Act. Interest and penalties were also imposed, and the first appellate authority dismissed the appeal. The petitioner contended that the authorities had failed to independently examine the nature and taxability of the services rendered and had not recorded the statutory preconditions. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the service tax demand raised under Section 73 of the Finance Act, 1994, while invoking the transitional and saving provisions contained in Section 142 of the CGST Act and the Assam GST Act, could not be sustained solely on the basis of Income-tax Form 26AS without any independent scrutiny of the underlying transactions. It observed that the issue was squarely covered by the decision in Technocom v. Union of India [(2026) 156 GSTR 602 (Gauhati)], wherein it had been held that a demand founded solely on Form 26AS data, without independent scrutiny and without recording satisfaction regarding the conditions for invoking the extended period of limitation, was unsustainable. The Court applied the said ratio to the present case and concluded that the statutory requirements for sustaining the demand had not been fulfilled. Accordingly, the impugned Order-in-Original and Order-in-Appeal were set aside and quashed.