Court sets aside order, finds errors in denial of exemption benefit. Petitioner granted relief sought.

The court set aside the order dated 14 October 2016, finding errors in the Commissioner's denial of the petitioner's exemption benefit and misapplication of the law. The constitutional validity of Section 35F was not addressed due to other findings. The court ruled in favor of the petitioner, granting the relief sought in the petition without costs.

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Issues Involved:
1. Challenge to the order dated 14 October 2016 by the Commissioner of Central Excise and Service Tax, Goa.
2. Constitutional validity of Section 35F of the Central Excise Act, 1944.
3. Availability of alternate remedy for the petitioner.
4. Applicability of service tax on deemed sale value under GVAT.
5. Compliance with the exemption Notification No. 12/2003-ST dated 20 June 2003.

Issue-wise Detailed Analysis:

1. Challenge to the Order Dated 14 October 2016:
The petitioner challenged the order dated 14 October 2016, which confirmed a demand of Rs. 186,73,790/- and imposed a penalty of 1% of the demanded service tax. The Commissioner based the order almost entirely on a prior CESTAT judgment dated 4 February 2014, which was later disapproved by the Hon'ble Apex Court in the case of Safety Retreading Co. (P) Ltd. Consequently, the foundation of the impugned order collapsed, necessitating its setting aside.

2. Constitutional Validity of Section 35F of the Central Excise Act, 1944:
The petitioner also challenged the constitutional validity of Section 35F. However, since the impugned order was set aside on other grounds, the court found no necessity to decide on this issue.

3. Availability of Alternate Remedy:
The respondents argued that the petitioner had an alternate and efficacious remedy of instituting an appeal against the impugned order. This objection was considered but not accepted by the court. The court noted that the issue was already covered by the Apex Court's decision in Safety Retreading Co. (P) Ltd., making it futile to relegate the petitioner to the Appellate Authority.

4. Applicability of Service Tax on Deemed Sale Value under GVAT:
The petitioner contended that the deemed sale value could not be exigible to service tax as sales tax and service tax were mutually exclusive. The Commissioner, however, had taken a view that the petitioner was required to pay service tax on the gross amount received for retreading of tyres, including the value of materials consumed. This reasoning was expressly disapproved by the Apex Court, which held that an assessee is liable to pay tax only on the service component, not on the value of goods sold.

5. Compliance with Exemption Notification No. 12/2003-ST Dated 20 June 2003:
The respondents argued that the petitioner failed to comply with the terms and conditions of the exemption notification, which required the sale value to be quantified and shown separately in the invoice. The court found that the exemption notification did not require such conditions. The petitioner had produced documentary proof, including a Cost Accountant's Certificate, indicating the value of goods and materials sold. The Commissioner was wrong in denying the benefit of the exemption by reading into the notification conditions that did not exist.

Conclusion:
The court set aside the impugned order dated 14 October 2016, finding that the Commissioner had erred in denying the petitioner the benefit of the exemption notification and in misapplying the law as clarified by the Apex Court. The constitutional validity of Section 35F was not addressed, as it was unnecessary given the other findings. The court ruled in favor of the petitioner, making the Rule absolute in terms of the prayer clause (a) of the petition, and there was no order as to costs.

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