TaxTMI 
TaxTMI 
2026 (1) TMI 853
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....by way of remand to the adjudicating authority as discussed supra." 2.1 Appellant is registered with the Service Tax Department for providing taxable services as defined under Section 65B(44) of the Finance Act, 1994. They hold three registration nos. as detailed below:- ⮚ Registration No.AAACR6837PSD005 ⮚ Registration No.AAACR6837PSD001 ⮚ Registration No.AAACR6837PSD003 2.2 On the basis of third party information received from the Income Tax Department for the financial year 2016-17, it was observed that appellant has declared amounts to the income tax which do not tally with the figures shown in the ITR of the appellant. Accordingly, show cause notices were issued to each of the registrant as detailed in table below:- Sl. No. SCN No. dated Period Value as per ITR Value as per ST-3 return Difference/ Service Tax due 1. 07/2021 dated 18.10.2021 2016- 17 3,02,07,021/- 84,57,221/- 32,62,470/- 2. 102/2021-22 dated 20.10.2021 2016- 17 3,02,07,021/- NIL 45,31,053/- 3. 06/2021 dated 18.10.2021 2016- 17 3,02,07,021/- NIL 45,31,053/- All the three show cause noti....
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....mands. 2.6 Aggrieved revenue have filed appeal before Commissioner (Appeals) on the following grounds:- "3.1 That the Impugned order dated 10.07.2024 has apparently been passed by the Adjudicating Authority without considering the issues to be examined as directed by the Hon'ble Commissioner (Appeals), Meerut and thus appears to be arbitrary and bad in law. 3.2 That the Adjudicating Authority has not examined the two other inactive Service Tax registrations of the party with corroborative documentary evidence and also as to whether the said two registrations were used by the parties for rendering any taxable services. 3.3 That in this regard of the contention of the parties that during 2016-17 out of the total value of Rs.3,02,07,021/-, amounting to Rs.2,17,49,800/- was from education services(pre-schooling) and Rs.84,57,221/- was from franchisee service on which service tax was paid in r/o centralized registration, the parties have not furnished their complete documents i.e. Income Tax Returns, Balance Sheet or Profit & Loss Account and the corresponding ledgers and the same have not been examined by the Adjudicating Authority. 3.4 That t....
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....ths from the date of issuance of SCN in this matter; the Adjudication has become time barred. v) The reconciliation of sale of goods, taxable and non-taxable services (turnover/revenue) for the period 201617 is provided below: Particulars Amount Sale of goods (books etc.) (Non taxable Revenue) 45,32,592/- Education Service (Non taxable Revenue) 2,17,49,800/- Franchise service (Taxable Revenue) (service tax paid under centralized registration) 84,57,221/- Grand Total of Revenue as shown in ITR 3,47,39,613/- The reconciliation reflects that there is no short payment of tax, and the SCN made feeble attempt to impose tax on services that are non-taxable exempted in terms of Mega Exemption Notification. Appropriate service tax on Franchise fees (taxable service) has already been paid." Commissioner (Appeals) disposed of the appeal of revenue vide the impugned order. 2.8 Aggrieved appellant have filed this appeal. 3.1 I have heard by electronic mode Shri R.S. Sharma, Advocate for the appellant and Smt Chitra Srivastava Authorized Representative for the revenue. 4.1 I have considered the impugned orders along with the submissions....
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....eal is not sustainable. 6.10 As regards to the grounds of the appellant that the Adjudicating Authority failed to verify the inactive status of the ST Registrations AAACR6837PSD001 and AAACR6837PSD003 by accepting the contention of the respondent without any corroborative evidence and could not verify the taxability in respect of the value of service amounting Rs. 2,17,49,800/- claimed as receipt against non-taxable/exempted education service [pre-school] and relied upon the certificate issued by the Chartered Accountant, I find that total income receipt against the services as per ITR Rs. 3,02,07,021/- was reported/noticed under CBDT data by the department in respect of the PAN AAACR6837P. The appellant department has also noticed the said two ST registrations despite the respondent was granted a centralized ST Registration on 10.08.2015. The said two registrations have been claimed inactive during the relevant period and as per respondent plea, audit w.r.t. the centralized registration has also been conducted by the department. In this regard, I find that the contention of the respondent that they do not have any copy of the said registration application and inactive sta....
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..... Thus, I hold that plea of the appellant that Adjudicating Authority has arbitrarily considered the defence put forth by the said respondent in its entirety without considering the facts/directions issued by the Hon'ble Commissioner(A) under Order dated 27.03.2024 with a casual and cursory approach and accepting the contention of the respondent on face value and also failed to examine the relevant documentary evidence resulting issuance of non-speaking and unreasoned order, is acceptable and the issue regarding non taxability/exemption w.r.t. the receipt shown against education service needs to be re-examined discretely with the help of corroborative evidence." 4.3 The entire matter has been made on the basis of show cause notices issued in the year 2021 making demand for the period 2016-17 by invoking the extended period of limitation on the basis of differences noticed between the figures declared by the appellant in their income tax return and ST-3 return. 4.4 I find that the unit of the appellant was audited by the departmental officers. The audit report issued to the appellant is reproduced below:- 4.5 On the basis of above stated audit report, show cause notice ....
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.... it is evident that the records of the appellant were duly audited earlier and the matter in respect of short payments was also adjudicated against the appellant. In such circumstances a show cause notice could not have been issued by invoking extended period of limitation. In para-6. of the Order-in-Original dated 10.07.2024 following has been recorded:- "6. Further, I find that the demands were issued subsequent to the Show Cause Notice dated 30.08.2019 for the period 2014-15 to 2017 18 in the wake of Audit Report - FAR No. 277/ST/2019-20 dated 09.08.2019. The entire factual matrix of their activities was in the knowledge of the Department as the Audit of the taxpayer for the period April, 2014 to June, 2017 was conducted by the officers of the CGST Audit Commissionerate and the ITR, STR, Balance sheet, ledgers, service tax invoices, Books of Accounts and all relevant records were examined by the Audit Party. The reconciliation of STR with ITR for 2016-17 was done by the Audit Party and no discrepancy or short payment of service tax on ground of mismatch in turnover shown in ITR vis-àvis taxable turnover in STR was found by the Audit Party. As the audit for the pe....
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.... have been invoked for making the demand when the appellant was registered and was duly audited, audit cannot said to be a fishing exercise and whatsoever remain could not have been covered by a subsequent show cause notice by invoking extended period of limitation. I observe that Hon'ble Supreme Court has in the case of Stemcyte India Therapeutics Pvt. Ltd [Order dated 14.07.2025 Civil Appeal Nos. 3816-3817 of 2025] observed as follows: "9. In the present case, the disputed period is from 01.07.2012 to 16.02.2014. However, the show cause notice was issued only on 28.07.2017, demanding a sum of Rs.2,07,29,576/- towards service tax, by invoking the extended period of limitation. Under section 73(1) of the Finance Act, 1994, a show cause notice must ordinarily be issued within one year from the relevant date. The proviso to section 73(1) allows an extended period of up to five years only where the nonpayment or short payment of service tax is due to fraud, collusion, wilful misstatement, suppression of facts, or contravention of the provisions of the Act or Rules, with an intent to evade payment of service tax. 9.1. It is evident from the communication dated 02.12.2....
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....oted that dhoop sticks are different products from agarbatis even though they belonged to the same category and the Tribunal was of the view that these were to be treated differently. Therefore, the clarification given in the context of the agarbatis could not be applicable to dhoop sticks etc. and the Tribunal came to the conclusion that inasmuch as the appellant had manufactured the goods without informing the central excise authorities and had been removing these without payment of duty, these would have to be taken to attract the mischief of the provisions of Rule 9(2) and the longer period of limitation was available. But the Tribunal reduced the penalty. Counsel for the appellant contended before us that in view of the trade notices which were referred to by the Tribunal, there is scope for believing that agarbatis were entitled to exemption and if that is so, then there is enough scope for believing that there was no need of taking out a licence under Rule 174 of the said Rules and also that there was no need of paying duty at the time of removal of dhoop sticks, etc. Counsel further submitted that in any event apart from the fact that no licence had been taken and for which....
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....tract the penal provisions of Section 11-A of the Act. If the facts are otherwise, then the position would be different. It is true that the Tribunal has come to a conclusion that there was failure in terms of Section 11-A of the Act. Section 35-L of the Act, inter alia, provides that an appeal shall lie to this Court from any order passed by the appellate tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purpose of assessment. Therefore, in this appeal, we have to examine the correctness of the decision of the Tribunal. For the reasons indicated above, the Tribunal was in error in applying the provisions of Section 11-A of the Act. There were no materials from which it could be inferred or established that the duty of excise had not been levied or paid or short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of the Act or of the Rules made thereunder. The Tribunal in the appellate order has, however, reduced the penalty to Rs 5000 and had also upheld the order ....
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....l, according to their interpretation, were not required to be included for the purpose of reckoning of the total excisable goods cleared by them. There is nothing on record to show that the appellants non-bonafidely held back information about the total value of the goods cleared by them with a view to evade payment of duty. Their explanation that it was only on the basis of their interpretation that the value of the exempted goods were not required to be included that they did not include the value of the exempted goods which they manufactured at the relevant time and falling under T.I. 68 is acceptable in the facts of that case. The departmental authorities were in full knowledge of the facts about manufacture of all the goods manufactured by them when the declaration was filed by the appellants. That they did not include the value of the product other than those falling under T.I. 14-E manufactured by the appellants has to be taken to be within the knowledge of the authorities. They could have taken corrective action in time. We therefore find there was no warrant in invoking longer time-limit beyond six months available for raising the demand. So far as the demand for the perio....
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.... T.I. 14-E manufactured by the respondent and this was in the knowledge, according to the Tribunal, of the authorities. These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence." (iii) Pushpam Pharmaceuticals Co. v. CCE [1995 Supp (3) SCC 462] "4. Section 11-A empowers the Department to reopen proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of course the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. Infact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly.....
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....e on the question of classification." 17. In Pahwa Chemicals (P) Ltd. v. CCE [(2005) 189 ELT 257] this Court held: "The appellants have all along claimed that merely because they were affixing the label of a foreign party, they did not lose the benefit of Notification No. 175/86-CE as amended by Notification No. 1/93-CE The view taken by the appellants had, in some cases, been approved by the Tribunal which had held that mere use of the name of a foreign party did not disentitle a party from getting benefit of the notifications. It is only after larger Bench held in Namtech Systems Ltd. v. CCE [(2000) 115 ELT 238 (cegat)] that the position has become clear. It is settled law that mere failure to declare does not amount to wilful misdeclaration or wilful suppression. There must be some positive act on the part of the party to establish either wilful mis-declaration or wilful suppression. When all facts are before the Department and a party in the belief that affixing of a label makes no difference does not make a declaration, then there would be no wilful misdeclaration or wilful suppression. If the Department felt that the party was not entitled to the benefit of ....
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....गà¥à¤¯ सेवा का नाम( Service Provider/Receiver ) Franchise Service Vstupigal (Registration Number) AAACR6837PSD005 ceft suafenin (Exemption Notf.) .... RaadamlarAgraft (Date of Last Audit) First Audit 10 difundirfleretaraft(Period of current Audit) APRIL 2014 to JUNE 2017 artmalartien Affa(Date of current audit) 61"& 11â„¢"December' 2017 = woznia, uftalÈ›i (Details of pending unconfirmed demand) N.A. 12 y Aria, atbilst( Details of confirmed demand of the past period) ..... 13 Julhoagenda, aftalt (Details of appeals filed if any) -.... 11 ant fart al war warra der ft riour (Numbers of audit pera raised) 04 15. ait Did att dar aber tu At afir an tored (B32ata) ( Total revenue involved in audit |Rs. 1,63.998)-(agreed), Paras(Detection)) लेंखà¥à¤¯à¤¾à¤ªà¤°à¥€à¤•à¥à¤·à¤¾à¤•à¥‡à¤¦à¥Œà¤°à¤¾à¤¨ जमाकियागया कà¥à¤² कर, वà¥à¤¯à¤¾à¤œ औरजà¥à¤°à¥à¤®à¤¾à¤¨à¤¾ रिà¤....
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....10,000/-vide Challan No.72034 dated 15/12/2017. Para has been approved during the MCM held on 08.03.2018at S No.36 of page No.4 of minutes .. the Act whereas they started their business in the month of September, 2014. They wolated the provisions contained tinder Rute 4 of the Service Tax Rules, 1994 read with Section 69 of the Finance Act, 1994 and thus made themselves table for penalty under Section 77(!) (2) or On being pointed out, the patty agreed with the views of stuhl and deposited the penalty of Rs 10.000 . . de Challan No 72034 dated 15/12/2017. Excess taken CENVAT credit :. During the course of scrutiny of Service Tax Cenvat Credit records for the Judit period, it was found that the party had taken excess input Ceivat Credit of amounting to Rs.15,900/- S.Tax of Rs. 15,900 + Intt. of Rs.4,712 + penalty of Yes, the assessee agreed to the observation of the audit and deposited Rs. 22,997/-vide Challan No.72032 dated 15/12/2017. Para has been approved during the MCM held on 08.03.2018 at SI. No.36 of page No.4 of minutes. "1 the financial year 2016-17. On being pointed out by the audit, the party agreed and deposited Rs.15900/- , Interest of Rs.4712/-....
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....nd penalty amount of Rs amount @ 7% An amount of 66,782/- alongwith interest of Rs TRO. penalty of RS. 22,787/- and 22,787/- ano Rs. 66,782/- alongwith interest of Rs service. Sale of educational books/text books/ bags/ uniforms is an exempted service as 'Trading Service". The input services on which cenvat credit was taken were utilized in provision of both taxable as well as exempted services. As per Rule 6 of Cenvat Credit Rules, 2004 the "Cenvat Credit shall not be allowed on ... input service as is tised.for provision of exempted service." As the party did not maintain separate records for receipt and use of mout services, they are required to follow the procedure of reversal of seven percent of value of exempted service as per Rule 6(3)(i) of Cenvat Credit Rules, 2004 (since 01.04.2016 seven percent subject to maximum of Cenvat credit availed plus opening balance). The value of exempted service was calculated @10 percent of the value of trading i.e. sale of books or the difference between the sale price and cost of such books, whichever is higher. In the present case the difference in the purchase and sale price of books/uniform/bags is higher than the 10....