2026 (3) TMI 985 - HC - Service Tax

Export-of-services exemption and registration allocation determined to require fresh adjudication after cancellation of redundant registration.

Dispute centred on whether service tax, interest and penalty could attach where the taxpayer had changed its name, claimed SEZ export exemption, and a ... Export of service - service tax demand, solely based on income tax returns - Registration and name-change attribution of tax liability - non-filing of returns - willful suppression - cancellation of the second registration - exemption for export of services under special economic zone arrangements. - Whether the impugned order confirming service tax, interest and penalty could stand where departmental records and proceedings attributed liability to a second registration despite the petitioner showing change of name and asserting that exports under the first registration attracted exemption. Registration and name-change attribution of tax liability - HELD THAT: - The Court found that the adjudicating authority had levied service tax under the second registration when the petitioner had produced material indicating that the transactions related to exports under the first registration and that the second registration caused inconsistency and potential double liability. The impugned order was set aside because the liability could not be sustained without giving the petitioner an opportunity to place relevant materials and to rectify registration anomalies; the matter was remitted for fresh consideration by the same authority. [Paras 8, 9] Impugned order set aside and matter remitted to the adjudicating authority for fresh adjudication after consideration of materials placed by the petitioner. The Court directed that on remand the petitioner be permitted to file additional material, including certified evidence of change of name and documents proving the claim of export exemption, and observed that if the transactions relate to the first registration the liability under the second registration would not stand. The Court also required the petitioner to take steps to cancel the second registration within a prescribed time-frame to enable effective adjudication and avoid parallel liabilities, and directed the adjudicating authority to conclude proceedings within a reasonable period thereafter. [Paras 8, 9] Final Conclusion: The High Court set aside the impugned order and remitted the matter for fresh adjudication, permitting the petitioner to place relevant materials and directing cancellation of the duplicate registration within a fixed time so that the adjudicating authority may decide the claim on its merits within a specified period. Issues: Whether the impugned order-in-original dated 21.08.2025 confirming service tax, interest and penalty against the petitioner (for tax periods 2016-17 and 2017-18 up to June 2017) could be sustained where (i) the petitioner had undergone a change of name, (ii) claimed exemption for export of services under special economic zone arrangements, and (iii) there existed a second service tax registration which the petitioner was directed to cancel.Analysis: The proceedings involved two registrations and alleged undeclared taxable receipts attributable to the second registration. The adjudicating authority's treatment of documents filed in the name reflecting the changed corporate name was examined in the context of whether the authority applied independent mind to the name change and the petitioner's claim of exemption for export of services under SEZ-related law. The relevance of non-filing under the second registration, the question of invocation of extended limitation on the basis of alleged willful suppression, and the availability of statutory appellate remedy were addressed. It was observed that if the transactions relevantly relate to the first registration and exports from SEZ, liability under the second registration would not properly attach; accordingly, the matter required fresh consideration after the petitioner places relevant materials and takes steps to cancel the second registration so that adjudication proceeds on correct factual and legal basis. Directions were given for cancellation of the second registration within a specified time and for completion of fresh adjudication within a reasonable timeline after such steps.Conclusion: The impugned order-in-original dated 21.08.2025 is set aside and the matter is remitted to the adjudicating authority to decide afresh after considering the materials placed by the petitioner and upon cancellation of the second registration; petitioner to cancel the second registration within four weeks and the adjudicating authority to conclude proceedings preferably within eight weeks thereafter. No order as to costs.