Custom, Excise & Service Tax Tribunal
Nobel King Purchase Solutions Pvt Ltd vs Commissioner-Commissioner Of Gst&Cce ... on 30 May, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO. I
Service Tax Appeal No. 40069 of 2022
(Arising out of Order-in-Original No. 24/2021 (C) dated 26.10.2021 passed by
the Commissioner of GST & Central Excise, Chennai)
M/s. Nobel King Purchase Solutions
Pvt. Ltd., ...Appellant
No. 28, Batra Centre, Sardar Patel Road,
Guindy Industrial Area, Guindy,
Chennai-600032.
Versus
Commissioner of GST and Central Excise ..Respondent
Chennai South Commissionerate
MHU Complex, No.692,
Anna Salai, Nandanam,
Chennai-600 035.
APPEARANCE:
Shri Gopal Mundhra, Advocate for the Appellant
Shri Anoop Singh, Authorised Representative for the Respondent
CORAM:
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
HON'BLE MR. AJAYAN T.V, MEMBER (JUDICIAL)
FINAL ORDER No.40567/2025
DATE OF HEARING: 06.02.2025
DATE OF DECISION:30.05.2025
Per Mr. Ajayan T.V.
M/s. Nobel King Purchase Solutions Pvt. Ltd. (NKPS), the
appellant herein, has preferred this appeal being aggrieved by
the impugned Order-in-Original No.24/2021(C) dated
26.10.2021 passed by the Adjudicating Authority confirming the
demand of Service Tax of Rs.2,23,98,376/- towards Service Tax
liability for the period from 01.10.2014 to 30.06.2017 under
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Section 73(2) of the Finance Act, 1994 (Act) along with
appropriate interest and equivalent penalty imposed under
Section 78 of the Act.
2. Briefly stated, the facts are that the appellant is engaged in the
provision of service related to procurement of marine stores,
spares, vendor management and repair services related to ship
equipment, to their associated enterprise M/s Executive Ship
Management Pte Singapore (ESM Pte). The appellant is
registered with Service Tax department under Service Tax
Registration No.AAECN1308BSD001. The appellant and ESM Pte
are group companies belonging to ESM Holdings Hong Kong
(ESM Holdings). Based on Intelligence that the appellant has not
paid service tax on data management, vendor management and
procurement of ship stores services provided by them to their
associated enterprise ESM Pte by claiming the same as export of
services, Officers of Directorate General of GST Intelligence
(DGGI), Chennai commenced their investigation, conducted
search proceedings as well as recorded statement from the
Head-Finance of the appellant. It was observed that M/s. ESM
Pte has entered into contracts with various ships for shipping
lines and are engaged in providing ship crew recruitment and
management services to these ships/ shipping lines. ESM Pte
has appointed the appellant as service provider to provide the
services of procurement of ship stores, repair of ship equipment
etc for the various ships/ ship lines which are been managed by
ESM Pte. The appellant provides services, interalia, involving
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data management and market intelligence reports for various
goods and services relating to shipping industry, procurement of
marine stores, spares, repair services and vendor management
related to ship equipment. Scrutiny of the documents
suggested that the appellant is acting as an intermediary
between its group company ESM Pte and the ships/shipping
lines and also acting as an intermediary between ESM Pte and
the Vendors. The said services are done by the appellant in the
taxable territory, however, the appellant has not paid service
tax on the said services provided, by claiming it as "export of
services".
3. On conclusion of its investigation the department was of the
view that ESM Pte and the appellant are group companies of
ESM Holdings, which is the holding company. The department
further held the view that though ESM Pte does not hold any
shares in the appellant, Mr. Balaji Singh Teeka and Ms. Sikha
Singh are the main subscribers and comprise the Board of
Directors and have formed the companies of ESM Holdings, ESM
Pte and the appellant (indirectly through ESM Holdings as cited
above) and are the ultimate beneficiaries of all these entities.
Hence it appears that the appellant is an establishment of Mr.
Balaji Singh Teeka and Ms. Sikha Singh in taxable territory and
ESM Pte is an establishment of Mr. Balaji Singh Teeka and Ms.
Sikha Singh in non taxable territory and as such both these
entities are "distinct persons" as explained under item (b) of
explanation 3 of clause (44) of section 65B of the Finance Act.
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4. The department was therefore of the view that merely because
ESM Pte is situated outside the taxable territory and merely
because the appellant has received the consideration in foreign
convertible currency from ESM Pte, the appellant cannot
consider the services provided as "export of services". Since the
appellant has not fulfilled the conditions of Rule 6A(1)(d) and
6A(1)(f) of the Service Tax Rules, 1944, the services rendered
by the appellant to ESM Pte cannot be treated as "export of
services" and hence the appellant is liable to pay service tax on
the services provided by them. The department further held the
view that the above facts regarding the non payment of Service
Tax on the taxable services provide by the appellant came to the
notice of the department only when conducting the investigation
and the appellant appears to have suppressed relevant and vital
facts from the department with malafide intention to evade
service tax. In view of the above, the department issued Show
Cause Notice No. 23/2020 dated 25.06.2020 invoking extended
period of limitation. The appellant replied contesting the
demands and after due process of law, the adjudicating
authority passed the impugned order. Hence this appeal.
5. Shri Gopal Mundhra, Advocate, appeared and argued for the
appellant. The Ld. Counsel submitted that ESM Holdings is the
ultimate parent entity for the Appellant and other two group
companies namely, Executive Shipping Service Pte Ltd,
Singapore ("ESS Pte") and Executive Ship Management Pte Ltd,
Singapore ("ESM Pte"). ESS Pte based in Singapore provides
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ship management services to ship owners and shipping lines.
The Ship management services, consists of two aspects/limbs,
Technical Management and Crew Management. ESS Pte further
enters into a back to back agreement with ESM Pte, by which
ESM Pte is required to perform the same ship management
services, comprising of technical management services and crew
management services for ESS Pte. ESM Pte in turn, sub-
contracts such technical management services and crew
management services to the Appellant and other group
companies situated in India as follows:
• Executive Ship Management Private Limited ("ESM
India"): ESM Pte sub-contracts crew management services
to this entity.
• Billion Honour Accounting Services ("BHAS"): ESM Pte
sub-contracts accounting and payroll related services to
this entity.
• South Nest Software Solutions Private Limited ("SNSS"):
ESM Pte sub-contracts ERP Development services to this
entity.
• Appellant (NKPS): ESM Pte sub-contracts procurement
related and data management services to the Appellant.
6. For the Dispute Period, the relevant flow of services is explained
as under:
(a) the Appellant was engaged in rendering procurement
related. services in terms of the Service Agreement dated 1
April 2013 (for the period till 31 March 2016) and dated 1 April
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2016 (for the period 1 April 2016 onwards), entered into
between the Appellant and ESM Pte (hereinafter collectively
referred to as "Service Agreement")
(b) The services rendered by the Appellant under the Service
Agreement, are in turn used by ESM Pte in the course of
rendition of its services to ESS Pte, which are broader in nature
i.e. of technical management and crew management services,
provided in accordance with Ship Management Agreement
between ESS Pte and ESM Pte whereby ESM Pte has agreed to
act as a sub manager for rendering its services on back-to back
basis for all the contracts entered into/to be entered into by ESS
Pte with the vessel owners as manager for the purposes of
rendering ship management and crew management services.
(c) ESS Pte in turn uses the services rendered by ESM Pte to
render technical management and crew management services to
the ships/shipping lines in terms of the ship management
agreement entered into with them.
7. Thus, the Ld. Counsel submits, while both ESS Pte and ESM Pte
are engaged in providing technical management and crew
management services, the Appellant merely renders one part of
only one aspect of such services Le, procurement related
services.
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8. In his written submissions, the Ld. Counsel depicted the flow of
services and the services performed by each entity as under :
Accounting and
BHAS
Payroll services
Technical Technical Technical
Management Management Management Procurement Related
Service Appellant
Ship Management Ship Management
Vessel ESS Pte Agreement (dated ESM
Agreement (multiple)
Owner 01.04.2013) between ESM Pte
between ESS Pte and vessel
owners Pte and ESS Pte
ERP development
SNSS
` services
Crew Crew
` Management Management
Crew ESM India
Management
9. Further, the coverage of the services rendered by the appellant as
governed by Service Agreement of 2013 and service agreement of 2016
were tabulated as under:
Particulars Service Agreement between the Service Agreement between the Appellant
Appellant and ESM Pte (2013) and ESM Pte (2016)
Agreement Service Agreement dt 1st April, 2013 Service Agreement dt 1st April, 2016
Parties ESM Pte and the Appellant ESM Pte and the Appellant
Duties of the 1. To liaise with the ESM Pte with 1. To provide Indian and international
Appellant as a respect to their requisitions for Store market information and updates to ESM
Service materials, spares, lubricating oils, Pte in respect of various suppliers of
Provider as chemicals, gases, charts & Store materials, spares, lubricating oils,
per Apndx-1 publications, repairs and chemicals, gases, charts and
maintenance services by ESM Pte. publications, repairs and maintenance
2. To request quotations from the services as may be specified by ESM
vendors or service providers for goods Pte.,
or services as per the instruction of 2. To assist ESM Pte to prepare a database
ESM Pte of approved suppliers
3. To arrange for and negotiate for 3. To maintain a master record of
inspection services as and when contracts entered into by ESM Pte with
required as per instruction of ESM Pte the various suppliers of goods and
4. To compare the quotations received services based on data and inputs
from the vendors and forward to ESM provided by ESM Pte.,
Pte for approval 4. To provide record keeping services to
5. To make a presentation of such ESM Pte in respect of invoices,
comparison of the quotations to ESM quotations, dispatch notes and allied
Pte and recommend appropriate documents as may be required by ESM
vendor Pte and specified in writing to NKP from
6. To negotiate the terms with the time to time.
vendors and place/ raise purchase
orders for approved requisitions on
behalf of ESM Pte
7. To follow up with the vendors, the
forwarding agents and the port
agents until the delivery of the
merchandise
8. To request delivery receipts from
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goods or services receiver on behalf of
ESM Pte.
9. To follow up with the vendors and
the agents for non delivery, non
conformance, returned goods etc.
10. To receive invoices on behalf of
ESM Pte and liaise with the vendors
regarding any discrepancies in the
invoices
11. To counter check the invoices with
the purchase order placed with the
vendors and match with delivery
receipts.
12. To forward the invoices for
approval and for payment processing
to ESM Pte.
13. To exercise necessary controls to
ensure that no wrong or duplicate
invoices are forwarded for approval
and payment
14. To retain copies of all
correspondence with the suppliers,
the agents and ESM Pte regarding
procurement and provide the same
upon request of ESM Pte to them
15. To gather, organize and analyze
purchase data as per requirements of
the ESM Pte.
16. To assist ESM pte to prepare a
database of approved suppliers and
enter contracts with the vendors,
makers or service providers.
Fees and Applicable Costs plus 8.70% and plus Applicable Costs plus 5.30% and plus taxes,
Payment for taxes, if any if any
Services
10. The Ld. Counsel submits that from the above it is evident that
ESM Pte is in the business of rendition of technical management
and crew management services, it had appointed the Appellant
to independently provide procurement related services in terms
of the Service Agreement. The procurement related services are
rendered entirely by the Appellant to ESM Pte and do not
amount to mere facilitation or arrangement of such services. It
is submitted that considering the nature of services rendered by
the appellant reliance is placed on the decision in SNQS
International Socks Private Ltd (Trading Division) v
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Commissioner of GST & Central Excise, Coimbatore
Commissionerate, 2023 (11) TMI 898- CESTAT Chennai,
affirmed in Commissioner of GST and Central Excise v.
M/s. SNQS International Socks Private Limited, 2024
(388) ELT 530 SC. That in the present facts, the appellant
provides a similar bouquet of services to ESM Pte on a principal
to principal basis and has no oral or written agreement with the
customers and accordingly the services rendered by the
appellant cannot be said to be intermediary services.
11. The Ld. Counsel further submits that in order to communicate
its requirements pertaining to stores, spares, provisions etc.,
ESM Pte provides access to the appellant to its software called
the phoenix software which has various modules to enable ESM
Pte to carry out its business in the most effective manner. It
provides access to the appellant of only one such module where
the Appellant can merely access the information pertaining to
stores, spares, provisions etc. required. There is also no
mechanism whereby the Appellant and ESS Pte/ vessel owners
can interact directly through such software. The information
pertaining to procurement flows to the Appellant only from ESM
Pte.
12. It is the submission of the Ld. Counsel that in terms of the
Service Agreement, the Appellant follows the cost-plus pricing
method and invoices its client ESM Pte at an amount equal to
cost plus 8.70%/5.30% and since the services provided by the
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Appellant are of a continuous nature, accordingly, the Appellant
raises its invoices on ESM Pte at regular monthly intervals. The
observations in the impugned order that the Appellant does not
render support services at its own risk and reward is entirely
inaccurate two counts, firstly, the Appellant's annual
remuneration is based on lumpsum amount, which is completely
unconnected with the consideration charged by ESM Pte to its
clients. The entire risk and reward for the Appellant is directly
related to its efforts and costs in rendering the service and
completely unconnected with the risk and rewards undertaken
by ESM Pte Singapore. Secondly, the Appellant is bound to earn
its monthly income, even if ESM Pte Singapore does not earn
any income from its clients. It is settled position that in cases
where consideration is charged as cost plus mark up, the
assessee does not act as an intermediary as the services had no
direct nexus with the underlying supply. Reliance is placed on
the decisions in Verizon India Pvt Ltd v CST, 2021 (45)
GSTL 275 (Tri-Del) and Lubrizol Advanced Materials India
Pvt Ltd v CCE, Belapur, 2019 (22) GSTL 355 (Tri-Mumbai).
13. The Ld. Counsel submits that in the present facts it is evident
that the appellant provides its services to ESM Pte on a principal
to principal basis and the Adjudicating Authority has erred in
rendering the impugned order failing to appreciate the existing
jurisprudence on intermediary services and the order is squarely
against the decisions in M/s. Beaumanoir India Pvt. Ltd. vs
Commissioner of CGST & CE, Gurgaon-I [2019 (6) TMI
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630-CESTAT Chandigarh], M/s. Firstrand Services Pvt.
Ltd. vs Commissioner of CGST & CE, Mumbai East [2019
(2) TMI 579-CESTAT Mumbai], M/s. Verizon India Pvt.
Ltd. vs Commissioner of Service Tax [2019 (8) TMI 3874-
CESTAT Delhi].
14. It is a well-established position that ESM Pte. and the Appellant
are two separate legal persons and not establishment of a single
legal person. In view of the above extract, it is evident that a
subsidiary and a holding company or group companies are not
covered by the abovementioned provision and therefore, do not
fall under the ambit of 'distinct persons'.
15. In this regard, reliance also placed on Linde Engineering
India Pvt. Ltd. vs. Union of India - 2022 (57) G. S. T. L.
358 (Guj.) where the following has been held, "Therefore, the
services rendered by the petitioner No.1-Company outside the
territory of India to its parent Company would have to be
considered "export of service" as per Rule 6A of the Rules, 1994
and Clause (f) of Rule 6A of the Rules, 1994 would not be
applicable in the facts of the case as the petitioner No.1, who is
the provider of service and its parent Company, who is the
recipient of services cannot be said to be merely establishment
so as to be distinct persons in accordance with Item (b)
explanation 3 of Clause (44) of Section 65B of the Act, 1994."
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16. The Ld. Counsel also pointed out that the services rendered by
the Appellant in terms of the Service Agreement for the Dispute
Period under Service Tax regime are identical in nature to those
which are now rendered post 1 July, 2017 under the GST regime
The GST laws allow refund of accumulated input tax credit
pertaining to export of goods/services. In this regard the
Appellant had regularly filed refund claims with respect to the
services rendered to ESM Pte in terms of the Service
Agreement. The GST authorities after examining whether the
services rendered by the Appellant are intermediary services
rendered in India or if they qualify as export of services,
accepted Appellants various refund claims and granted refund at
various instances through GST refund orders as are annexed to
the appeal, after concluding that the services rendered by the
appellant are not intermediary services rendered in India but are
in fact export of services.
17. The Ld. Counsel also relied on Circular No. 159/15/2021-GST
dated 20.09.2021 wherein the meaning of term intermediary
was again clarified. He submitted that while the said Circular is
issued in the GST regime, it has specifically stated in no unclear
terms that the concept of intermediary was borrowed from the
service tax regime and that there is broadly no change in the
scope of intermediary services in the GST regime. Thus, the said
Circular is binding on the Respondent even for determining the
scope of "intermediary" under the Service Tax regime. It has
been clarified in para 3.5 thereof that sub-contracting for a
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service is not an "intermediary" service. Reliance is also placed
on the decisions in Genpact India Pvt Ltd v UOI & Ors, 2023
(77) GSTL 512 (P & H), Integreon Managed Solutions Pvt
Ltd v. Commissioner of Central Goods and Service Tax,
Mumbai East, 2023 (4) TMI 1074-CESTAT MUMBAI and
Black Rock Service India Private Limited v Commissioner
of CGST.
18. The Ld. Counsel further submits that the Adjudicating Authority
has erred in holding that the services provide by the appellant
are not export of services as both the appellant and ESM Pte are
merely establishment of distinct persons. It is submitted that
the appellant and the ESM Pte are company registered under
separate laws and have their own individual identity. That the
appellant and ESM Pte are not direct holding and subsidiary
companies, but even in case if such a relationship exists, where
the holding company directly controls 100% of the subsidiary,
there are judicial precedents wherein it has been undeniably
held that even in case of holding and subsidiary companies the
explanation (b) to Section 65B(44) would not be applicable for
the reason that the two entities are separate companies. That in
the present case the appellant and ESM Pte are not even holding
and subsidiary companies but are rather group companies,
operating independently, with independent management,
operations, and decision making and there cannot be any
instance of application of explanation (b) to Section 65B(44) to
such facts. Reliance is placed on the decisions in Linde
Engineering India Pvt Ltd v UOI, 2022 (57) GSTL 358
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(Guj), L & T Sargent & Lundy Ltd v CCE & ST, Vadodara-I,
2021 (11) TMI 69-CESTAT Ahmedabad, Zaloni
Technologies India Pvt Ltd v CCE, 2022 (10) TMI 878-
CESTAT KOLKATA, Celtic Systems Pvt Ltd v CCE & ST
Vadodara-I, 2023 (70) GSTL 74 (Tri-Ahmd), selling
simplified India Pvt Ltd v Commr of CGST, East Delhi,
2022 (9) TMI 522-CESTAT, New Delhi and Vodofone
International Holdings BV v UOI, 2012 (6) SCC 613.
19. It is also submitted that the use of the word 'merely' further
dilutes condition (f) of Rule 6A and on a conjoint reading of the
word 'merely' while interpreting clause (f) of Rule 6A, i.e. "the
provider of service and recipient of service are not merely
establishments of a distinct person", it is made apparent that
the provider of service and the recipient of service are not
merely establishment of distinct persons, or no more than what
is specified in the statute. Therefore, the term "merely" in the
context of the export of service condition implies that the
service provider and service recipient must not only be different
establishment of the same person, but there must be a cogent
relationship between service provider and service recipient and
there must be undisputed fact of performance of service.
Nevertheless, in the facts of the present case, the Appellant and
ESM pte are distinct legal entities therefore the said condition
stands fulfilled.
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20. The Ld. Counsel also placed reliance on CBIC Circular No.
161/17/2021-GST dated 20.09.2021 in relation to export of
services under the GST regime. The circular has in no unclear
terms clarified that a company incorporated in India and a body
corporate incorporated by or under the laws of the country
outside India, which is also referred to as foreign company
under companies Act, are separate persons, and thus are
separate legal entities. Accordingly, these two separate persons
would not be considered as "merely establishments of a distinct
person". Therefore, he submits that the appellant satisfies all
the condition prescribed for classifying its services as "export of
services".
21. The Ld. Counsel submits that the appellant has secured
favourable judgements in the Appellant's' own case under GST
which dealt with the same service agreement for the period
from 1st July 2017 and governed by service agreement, 2016 as
well as in the case of group companies rendering other services
sub-contracted by ESM Pte, namely, in respect of ESM India by
Final order No.A/85492/2024 dated 14.05.2024 in Service Tax
Appeal No.86879 of 2021 in the case of Executive Ship
Management Pvt Ltd v Comr. of CGST & CE, Navi Mumbai; the
Joint Commissioner of CGST & Central Excise, Thane
Commissionerate vide Order No.61/AKS-10/TH-CGST/2024-25
dated 11th July, 2024 has held that services rendered by the
Appellant were not intermediary services and would be treated
as export of service under GST and that GST authorities have
also granted refund at various instances through GST refund
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orders and the Additional Commissioner of GST & Central
Excise, Chennai vide Order in Original No.21/2025-DGGI (ADC)
dated 17.01.2025 has in case of one of the other group entities,
i.e. BHAS, held that accounting and payroll services provided by
it would not qualify as 'intermediary' service and would be
treated as export of service under GST and all the ruling had
inter-alia also relied upon the ruling in SNQS International Socks
Private limited (Trading Division) cited supra.
22. The Ld. Counsel submits that the appellants were filing their ST-
3 returns regularly and duly indicating therein the amounts
charged against export of service provided and that thus the
recovery of the entire tax demanded is barred by limitation and
is unsustainable. He submits that when they have shown the
amount charged against export of service provided, extended
period of limitation cannot be invoked, and if at all, only the
normal periods of limitation of 30 months from the date of filling
of Service Tax returns should be applicable. The present matter
covers the dispute period from October 2014 to June 2017
whereas the SCN was issued only on 25.06.2020. The appellant
had filed Service Tax returns for this period on 20.04.2015,
21.10.2012, 22.04.2016, 24.10.2016, 25.04.2017 and
14.08.2017 respectively as is evidenced by the ST-3 returns
forming part of the Appeal records. In the present case since
the service tax returns were all filed well before January 2018.
He emphasised that the recovery of the entire tax demanded is
barred by limitation and is unsustainable. Reliance is placed on
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the decision in Uniworth Textiles Ltd. vs CCE, Raipur [2013
(288) ELT 161 (SC).
23. It was also submitted that the appellant had made sufficient
disclosure in books of account and return to the extent of export
claimed. Reliance was placed on the decisions in Good Year
India Ltd vs. CCE 024 (10) TMI 287 - CESTAT
CHANDIGARH , Orbit Research Associates Private Limited
vs. Commissioner Of Service Tax (Appeals I), New Delhi -
2023 (8) TMI 246 - CESTAT New Delhi, Progressive
Endeavours Pvt. Ltd. vs. CCE 2024 (10) TMI 1261 -
CESTAT KOLKATA and Kamal Auto Finance Ltd. v.
Commissioner of Service Tax, Jaipur [2012 (26) S.T.R. 46
(Tri. - Del.) .
24. He submitted that even otherwise the scope of intermediary is a
matter of interpretation and is a contentious issue and the
question of alleging mala fide does not arise. Reliance is place
on the decision M/s. Sunrise Immigration Consultants Pvt.
Ltd. vs Commissioner of Central Excise and Service Tax,
Chandigarh [2018-TIO-1849-CESTAT-CHD], LANXESS ABS
Ltd. vs Commissioner [2010(259) ELT 551 (Tribunal)].
The Ld. Counsel says that the appellant was under bona
fide belief as regards the non-taxability and place
reliance on the decisions in Commissioner of Customs vs.
Reliance Industries Limited (2015 (325) E.L.T. 223
(S.C.)), Jaiprakash Industries Ltd. vs. CCE, Chandigarh
18
[2002 (146) E.L.T. 481 (S.C)), Collector vs. Jaypee Rewa
Cements Ltd. [1997 (094) E.L.T. A247 S.C.).
25. He further submits that for the reasons that the impugned order
has failed to bring out any malafide or wilful intention on the
part of the appellant, penalty is also not imposable and places
reliance on decisions in Collector vs. Tin Plate Co. of India
Ltd. (1996 (87) EL.T. 589. (S.C.), S. N. Sundersons
(Minerals) Ltd. us. Supt. (Preventive), C. Ex. 1995 (75)
ELT 273 (M.P.) and LANXESS ABS Ltd. vs. Commissioner
2010 (259) E.L.T. 551 (Tribunal), CCE vs. Pioneer
Scientific Glass Works [2006 (197) E.LT. 308 (S.C.)], CCE
vs. Bajaj Auto Ltd. [2010 (260) E.LT. 17 (S.C.)],
Hindustan Steel Ltd vs. State of Orissa [1978 (2) E.L.T.
J159 (S.C.)], Akbar Badruddin Jiwani us. Collector of
Customs (1990 (47) E.L.T. 161 (S.C.). Tata Engineering
and Locomotive Company Ltd. vs. Collector of Customs
(1991 (56) E.L.T. 812 (Tribunal)), Nestle India Ltd. vs.
CCE, Goa (2004 (163) E.L.T. 249 (Tri. Mumbai)) and N.D.
Metal Industries Ltd. us. Commissioner of Customs
(Import)., Nhava Sheva (2007 (220) E.L.T. 807 (Tri.-
Mumbai)].
26. Per contra, Shri Anoop Singh, Ld. AR for the department while
reiterating the rationale reflected in the impugned OIO, submits
that the service rendered by the appellant fall under definition of
intermediary as discussed in the OIO with specific reference to
clauses of agreement, definition of Intermediary in statutory
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rules. He submitted that without facilitation done by the
Appellant the main services cannot be rendered. It is evident
that the Ship owners or vendors are paying for the requisition of
goods or services. Consideration for the Appellant for activities
rendered in respect of Ship owners/vendors is in the form of
consideration from their foreign service recipient who is indeed
the main service provider.
27. Ld. AR submits that for intermediary or agent or broker, it is
not necessary that the consideration must be directly received
from Customer of main service. Usually, they receive
consideration from Principal Service Provider or provider of main
service, even for the service rendered by agent or intermediary
to various customers, for e.g.:- Insurance Agent or Custom
Broker.
28. The Ld. AR submits that the Purchase Order, Invoices, revised
invoices, delivery receipts, negotiations etc are dealt by the
Appellant on directions and on behalf of foreign Service Provider
who is providing main service. That, it is the matter of record
that the appellant liase/coordinate with vendors as well as Port
agents as per instruction of Foreign service provider of the main
service.
29. The Ld. AR draws attention to para 12.2 of the decision in M/s.
SNQS International Socks Private Limited (Trading
Division) Versus Commissioner of G.S.T. and Central
Excise, Coimbatore Commissionerate - 2023 (11) TMI 898 -
20
CESTAT CHENNAI, wherein it was observed that the word "on
behalf" in the statue connote an agency when one person acts
on behalf of the other. The former acts as an agent of the latter.
An agency is the relationship of principal and agent in terms of a
contract - express or implied. The Ld. AR submits that it is the
matter of record that clauses after clauses in the duties of
Appellant as per Contract refers to "On behalf of". Ld. A.R.
contended that the Appellant is under obligation to act on behalf
of, to act on approval of, to act upon request of, to liase on
behalf of Main service provider.
30. The Ld. AR submits that the issue of non-fulfilment of condition
laid down in Rule 6A(1)(d) has been discussed by the
Adjudicating Authority. Place of provision of Intermediary
Service is the location of Service Provider and in instant case,
service provider is located in India and therefore, place of
provision is within India. In view of above, as per Rule 6A of
Service Tax Rules,1994, since place of service for such activities
being in the nature of intermediary services is not outside India,
such services cannot be treated as export of service. The Ld. AR
submits that the issue of condition laid down in Rule 6A(1)(f)
has been discussed by the Adjudicating Authority and in the
instant case provider and recipient are not merely establishment
of a distinct person. From the facts and findings discussed, it is
evident that these companies are guided by the same Head and
Brain. The Ld. AR submits that the argument of the counsel
that the expression 'establishments of distinct persons' should
21
be establishment of the same person, i.e. the same legal entity,
placing reliance on in the case of M/s Linde Engg and GST
Circular is not correct.
31. The Ld. AR draws attention to the definition of person in Section
65B(37), rule 6A and submits that the definition of 'person' does
not mean company alone the definition of person for the
purpose of Service Tax includes natural persons/'individuals. It
is the Ld. AR submission that as per Rule 6A (1) of STR 1994
provision of any service provided or agreed to be provided shall
be treated as export of service when the provider of service and
recipient of service are not merely establishments of a distinct
person in accordance with item (b) of Explanation 3 of clause
(44) of section 65B of the Act. It is his submission that
interpretation given by the assessee as mentioned in certain
words in statutory rules and definition of person in statute
completely redundant.
32. Ld. A.R. submits that in the case at hand, M/s NKSPLL is an
establishment of Shri Balaji Singh Teeka and Smt Sikha Singh in
taxable territory and M/s ESM Pte Singapore is an establishment
of same persons in non-taxable territory. As such both these
two separate legal entities are merely establishments of same
set of individuals. It is submitted that GST Circulars and case
laws may not be relevant since the definition of person or use of
words' MERELY' may be unique to Service Tax laws and rules.
Further, in respect of other case laws cited by learned Counsel,
22
it is submitted that the facts such as two separate legal entities
being merely establishments of same set of individuals; contract
for essentially carrying out instructions given to an entity in
taxable territory by related entity in non-taxable territory and
both entities being guided by same head and brain etc are
peculiar to the findings of learned Adjudicating authority in this
case.
33. We have heard the rival submissions at length, carefully perused
the appeal records as well as the case laws submitted as relied
upon.
34. The issues that arise for determination are :
A. Whether the Demand is wholly barred by limitation as
contended by the Appellant?
B. If the demand is not barred by limitation, then on merits the
issues that arise for consideration are whether the appellant
is an intermediary as defined in Rule 2(f) of the Place of
Provision of Services Rules, 2012 ( POPS Rules) and also
whether the services rendered by the Appellant to M/s. ESM
Pte can be treated as Export of Services as per Rule 6A of
the Service Tax Rules, 1994 (STR Rules)?
35. When a plea that the demand is wholly barred by limitation is
raised, we find it apposite to deal with the said issue first. The
question of limitation goes to the root of the matter and involves
a question of jurisdiction to raise the demand itself in the first
23
instance. This in turn is premised on the provisions of law that
prescribe the situations as well as the attendant ingredients
thereto that attract its application. The findings of fact on the
question of jurisdiction would be a jurisdictional fact. Such a
jurisdictional question therefore needs to be examined and is to
be determined having regard to both the facts and law involved
therein. To appreciate whether the demand is wholly barred by
limitation, it would therefore be appropriate to reproduce section
73(1) of the Finance Act,1994 as it stood at the relevant time.
This section deals with recovery of service tax not levied or paid
or short levied or short paid or erroneously refunded. It is as
follows:
"73.Recovery of service tax not levied or paid or short-levied or
short-paid or erroneously refunded. --
(1) Where any service tax has not been levied or paid or has
been short-levied or short-paid or erroneously refunded, Central
Excise Officer may, within thirty months from the relevant date,
serve notice on the person chargeable with the service tax which
has not been levied or paid or which has been short-levied or
short-paid or the person to whom such tax refund has
erroneously been made, requiring him to show cause why he
should not pay the amount specified in the notice :
Provided that where any service tax has not been levied or paid
or has been short-levied or short-paid or erroneously refunded
by reason of --
(a) fraud; or
(b) collusion; or
24
(c) wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Chapter or of
the rules made thereunder with intent to evade payment of
service tax,
by the person chargeable with the service tax or his agent, the
provisions of this sub-section shall have effect, as if, for the
words "thirty months", the words "five years" had been
substituted."
36. Thus, from a perusal of sub-section (1) of section 73 of the
Finance Act, it can be seen that where any service tax has not
been levied or paid, the Central Excise Officer may, within thirty
months from the relevant date, serve a notice on the person
chargeable with the service tax which has not been levied or
paid, requiring him to show cause why he should not pay
amount specified in the notice.
37. The proviso to section 73(1) of the Finance Act stipulates that
where any service tax has not been levied or paid by reason of
fraud or collusion or wilful mis-statement or suppression of facts
or contravention of any of the provisions of the Chapter or the
Rules made there under with intent to evade payment of service
tax, by the person chargeable with the service tax, the
provisions of the said section shall have effect as if, for the word
"thirty months", the word "five years" has been substituted.
25
38. The "relevant date‟ has been defined in section 73 (6) of the
Finance Act as follows:
" 73 (6) For the purposes of this section, "relevant date" means,
--
(i) in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short- paid--
(a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed;
(b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules;
(c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder;
(ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made there under, the date of adjustment of the service tax after the final assessment thereof;
(iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund." (emphasis supplied)
39. The provisions of Section 73, save for a variation in the normal period, when it was one year as opposed to thirty months in the provision as reproduced above, came up for consideration before the Honourable Delhi High Court in Bharat Hotels Ltd v. 26 Commissioner of C.Ex (Adjudication), 2018 (12) GSTL 368 (Del.), and was analysed in detail. The relevant portions of the judgement are under:
"20. The only question of law that arises in the present appeal is whether the [Customs,] Excise and [Service] Tax Appellate Tribunal (CESTAT) fell into error in holding that the eviction of the extended period under proviso to Section 73(1) of the Finance Act in respect of two services, i.e. management, maintenance and repair services and Mandap Keeper services is justified in the facts and circumstances of the case. At the outset, the relevant section in question, i.e., Section 73 of the Finance Act (as applicable in 2008) needs to be stated. The section is reproduced below for reference - "SECTION 73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. - (1) Where any Service Tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the Service Tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice :
Provided that where any Service Tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of -
(a) fraud; or
(b) collusion; or
(c) wilful misstatement; or
(d) suppression of facts; or 27
(e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of Service Tax, by the person chargeable with the Service Tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "one year", the words "five years" had been substituted.
Explanation - Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of eighteen months or five years, as the case may be."
21. The meaning of the words 'wilful misstatement' and 'suppression of facts' has been a subject matter of judicial scrutiny in various Supreme Court judgments which are necessary to be discussed before proceeding to the merits of this case. However, these words have been interpreted as given in Sections 28 of the Customs Act, 1962 (hereinafter referred to as "the Customs Act") and 11A of the [Central] Excise Act, 1944 (hereinafter referred to as "the Excise Act"). In order to determine if the same interpretation extends to Section 73 of the Act the following decisions of the Supreme Court have to be looked at. In the case of Uniworth Textiles Ltd. v. Commissioner of Central Excise, Raipur [(2013) 9 SCC 753 = 2013 (288) E.L.T. 161 (S.C.)] the Supreme Court discussed its previous judgments to determine the applicability of the proviso to Section 28 of the Customs Act for extension of limitation period for issuing notice for payment of duties that have not been levied, short-levied or erroneously refunded. The relevant paragraphs of the judgment are excerpted below :
"9. The show cause notice was issued on 2-8-2001, more than six months after the appellant had imported furnace oil on behalf of 28 Uniworth Ltd. in January, 2001. This time period of more than six months is significant due to the proviso to Section 28 of the Act. The Section, at the relevant time, read as follows :
28. Notice for payment of duties, interest, etc. -
(1) When any duty has not been levied or has been short-levied or erroneously refunded, or when any interest payable has not been paid, part paid or erroneously refunded, the proper officer may, -
(a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year;
(b) in any other case, within six months, from the relevant date, serve notice on the person chargeable with the duty or interest which has not been levied or charged or which has been so short-levied or part paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice :
Provided that where any duty has not been levied or has been short- levied or the interest has not been charged or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful misstatement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words "one year" and "six Months", the words "five years" were substituted.
Explanation. - Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of one year or six months or five years, as the case may be. (Emphasis supplied)
10. The section imposes a limitation period of six months within which the concerned authorities must commence action against an importer/assessee in case of duties not levied, short-levied or erroneously refunded. It allows the said limitation period to be read as five years only in some specific circumstances, viz. collusion, wilful 29 misstatement or suppression of facts. Since the said show cause notice was issued after the elapse of six months, the revenue, for its action to be legal in the eyes of law, can only take refuge under the proviso to the section."
22. Section 28 of the Customs Act like Section 73 of the Act (in this case) relates to notice for payment of duty that has not been levied, short-levied or erroneously refunded. The proviso to Section 28 of the Customs Act and the proviso to Section 73(1) of the Act, both set out conditions for extension of limitation period for issuing of a Show Cause Notice. The difference between the two sections lies in the insertion of conditions of 'fraud' and 'contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of Service Tax' in Section 73 of the Finance Act, 1994. In Uniworth (supra), the Supreme Court discussed the interpretation of the proviso of a similar provision in Section 11A of the Excise Act and held that it is pari materia to the proviso to Section 28 of the Customs Act. The relevant paragraphs are excerpted below :
"13. This Court, in Pushpam Pharmaceuticals Co. v. Collector of Central Excise, Bombay [1995 Supp (3) SCC 462], while interpreting the proviso of an analogous provision in Section 11A of The Central Excise Act, 1944, which is pari materia to the proviso to Section 28 discussed above, made the following observations :
xxxxxx xxxxxx xxxxxx
18. We are in complete agreement with the principle enunciated in the above decisions, in light of the proviso to Section 11A of the Central Excise Act, 1944. However, before extending it to the Act, we would like to point out the niceties that separate the analogous provisions of the two, an issue which received the indulgence of this Court in Associated Cement Co. Ltd. v. Commissioner of Customs [(2001) 4 SCC 59] 3, at page 619 in the following words : 30
53. ... Our attention was drawn to the cases of CCE v. Chemphar Drugs and Liniments [(1989) 2 SCC 12], Cosmic Dye Chemical v. CCE [(1995) 6 SCC 117], Padmini Products v. CCE [(1989) 4 SCC 275], T.N. Housing Board v. CCE [1995 Supp (1) SCC 50] and CCE v.
H.M.M. Ltd. (supra). In all these cases the Court was concerned with the applicability of the proviso to Section 11A of the Central Excise Act which, like in the case of the Customs Act, contemplated the increase in the period of limitation for issuing a show cause notice in the case of non-levy or short-levy to five years from a normal period of six months....
54. While interpreting the said provision in each of the aforesaid cases, it was observed by this Court that for proviso to Section 11A to be invoked, the intention to evade payment of duty must be shown. This has been clearly brought out in Cosmic Dye Chemical case where the Tribunal had held that so far as fraud, suppression or misstatement of facts was concerned the question of intent was immaterial. While disagreeing with the aforesaid interpretation this Court at p. 119 observed as follows: (SCC para 6)
6. Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as misstatement or suppression of facts are concerned, they are clearly qualified by the word 'wilful' preceding the words 'misstatement or suppression of facts' which means with intent to evade duty. The next set of words 'contravention of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intent to evade payment of duty'. It is, therefore, not correct to say that there can be a suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Misstatement or suppression of fact must be wilful.
The aforesaid observations show that the words "with intent to evade payment of duty" were of utmost relevance while construing the earlier expression regarding the misstatement or suppression of 31 facts contained in the proviso. Reading the proviso as a whole the Court held that intent to evade duty was essentially before the proviso could be invoked.
55. Though it was sought to be contended that Section 28 of the Customs Act is in pari materia with Section 11A of the Excise Act, we find there is one material difference in the language of the two provisions and that is the words "with intent to evade payment of duty" occurring in proviso to Section 11A of the Excise Act which are missing in Section 28(1) of the Customs Act and the proviso in particular....
56. The proviso to Section 28 can inter alia be invoked when any duty has not been levied or has been short-levied by reason of collusion or any wilful misstatement or suppression of facts by the importer or the exporter, his agent or employee. Even if both the expressions "misstatement" and "suppression of facts" are to be qualified by the word "wilful", as was done in the Cosmic Dye Chemical case while construing the proviso to Section 11A, the making of such a wilful misstatement or suppression of facts would attract the provisions of Section 28 of the Customs Act. In each of these appeals it will have to be seen as a fact whether there has been a non-levy or short-levy and whether that has been by reason of collusion or any wilful misstatement or suppression of facts by the importer or his agent or employee. (Emphasis supplied)"
23. It is important to note the proviso to Section 11A of the Excise Act at this stage. It states that :
"Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of
-
(a) fraud; or
(b) collusion; or
(c) any wilful misstatement; or
(d) suppression of facts; or 32
(e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under Section 11AA and a penalty equivalent to the duty specified in the notice."
24. As noticed in the excerpted portions of the Supreme Court's judgment, the material distinction between the provisos of Section 11A of the Excise Act and Section 28 of the Customs Act was contemplated in Associated Cement Co. Ltd. v. Commissioner of Customs (supra) [2001 (128) E.L.T. 21 (S.C.)]. The only material difference in the language of the two provisions is that the phrase 'with intent to evade payment of duty' is not used in Section 28 of the Customs Act. The Court held that the words 'fraud' and 'collusion' inherently imply the requirement of an intent, which in this case is the intent to evade payment of duty. With respect to misrepresentation and suppression of facts the Court held that the fact that these words are preceded by the word 'wilful' means that there should be an intention to evade payment of duty behind these acts. And, therefore, in Uniworth (supra), the judgments of the Supreme Court interpreting the proviso to Section 11A of the Excise Act were applied in the interpretation of the proviso to Section 28 of the Customs Act.
25. The meaning of the phrase pari materia has been explained in an American case in the following words: "Statutes are in pari materia which relate to the same person or thing, or to the same class of persons or things. The word par must not be confounded with the word simlis. It is used in opposition to it - intimating not 33 likeness merely but identity. It is a phrase applicable to public statutes or general laws made at different times and in reference to the same subject." [United Society v. Eagle Bank, (1829) 7 Connecticut 457, p. 470, as cited in CRAIES, Statute Law, p. 134 (7th Edition)]. The provisos to Sections 11A of the Excise Act, 28 of the Customs Act and Section 73 of the Finance Act, refer to the same class of persons, i.e., persons from whom tax has been not been levied, or has been short-levied or erroneously refunded. The subject matter of these provisos is issuance of a Show Cause Notice in order to collect such tax. Further, there seems to be no difference in language of the proviso to Section 11A of the Excise Act and Section 73(1) of the Finance Act. Since, the pith and substance of both these provisions is the same, the various judgments of the Supreme Court discussing the interpretation of proviso to Section 11A of the Excise Act can be extended to interpret Section 73(1) of the Finance Act. Further, since proviso to Section 28 of the Customs Act is pari materia to proviso to Section 11A of the Excise Act (as held in Uniworth), the interpretation of proviso to Section 28 may also be extended to interpret the proviso to Section 73 of the Finance Act. Uniworth (supra) is also authority on the meaning of 'wilful misstatement' and 'suppression of facts'; the Court held that :
"...
12. ... The conclusion that mere non-payment of duties is equivalent to collusion or wilful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of non-payment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would 34 leave no situation for which, a limitation period of six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or wilful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso.
.......
14. In Sarabhai M. Chemicals v. Commissioner of Central Excise, Vadodara [(2005) 2 SCC 168], a three-judge bench of this Court, while referring to the observations extracted above, echoed the following views :
"23. Now coming to the question of limitation, at the outset, we wish to clarify that there are two concepts which are required to be kept in mind for the purposes of deciding this case. Reopening of approvals/assessments is different from raising of demand in relation to the extended period of limitation. Under Section 11A(1) of the Central Excise Act, 1944, a proper officer can reopen the approvals/assessments in cases of escapement of duty on account of non-levy, non-payment, short-levy, short-payment or erroneous refund, subject to it being done within one year from the relevant date. On the other hand, the demand for duty in relation to extended period is mentioned in the proviso to Section 11A(1). Under that proviso, in cases where excise duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded on account of fraud, collusion or wilful misstatement or suppression of facts, or in contravention of any provision of the Act or Rules with the intent to evade payment of duty, demand can be made within five years from the relevant date. In the present case, we are concerned with the proviso to Section 11A(1).35
24. In the case of Cosmic Dye Chemical v. Collector of Central Excise, Bombay [(1995) 6 SCC 117], this Court held that intention to evade duty must be proved for invoking the proviso to Section 11A(1) for extended period of limitation. It has been further held that intent to evade duty is built into the expression "fraud and collusion" but misstatement and suppression is qualified by the preceding word "wilful". Therefore, it is not correct to say that there can be suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for invoking the proviso to Section 11A.
25. In case of Pushpam Pharmaceuticals Co. v. C.C.E. [1995 (78) E.L.T. 401 (S.C.)], this Court has held that the extended period of five years under the proviso to Section 11A(1) is not applicable just for any omission on the part of the assessee, unless it is a deliberate attempt to escape from payment of duty. Where facts are known to both the parties, the omission by one to do what he might have done and not that he must have done does not constitute suppression of fact."
26. Again, the Supreme Court in Continental Foundation Joint Venture Holding v. Commissioner of Central Excise, Chandigarh-I [(2007) 10 SCC 337 = 2007 (216) E.L.T. 177 (S.C.)], held that :
"10. The expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or 'collusion' and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a wilful misstatement. 36 The latter implies making of an incorrect statement with the knowledge that the statement was not correct. "
27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word 'suppression' in the proviso to Section 11A(1) of the Excise Act has to be read in the context of other words in the proviso, i.e. "fraud, collusion, wilful misstatement". As explained in Uniworth (supra), "misstatement or suppression of facts" does not mean any omission. It must be deliberate. In other words, there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a positive act of the assessee to avoid paying excise duty. The terms 'misstatement' and 'suppression of facts' are preceded by the expression 'wilful'. The meaning which has to be ascribed is, deliberate action (or omission) and the presence of an intention. Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention.
28. In the present case, the Revenue argues that appellant wilfully suppressed the value of taxable services and thus did not discharge its liability of paying the Service Tax on same. The contention of the appellant is that the appellant was under a bona fide belief that the appellant was not liable for payment of Service Tax for the Mandap Keeping and Management, Maintenance and Repair Services. The appellant has supported the non-payment of Service Tax for Mandap Keeper Services by Notification No. 12/2003-S.T. It also states that, during the enquiry itself, it paid Service Tax on the sale of the above-mentioned items for the 37 periods 2004-05 and 2005-06 with interest and had also started paying Service Tax on these items regularly from April, 2006. The same has been also acknowledged by the DGCEI in the SCN.
29. As regards management, maintenance and repair services the appellant claimed that it was unaware of the development under Section 65(105)(zzg) of the Finance Act and that when the same came to the knowledge of the appellant, the appellant promptly got itself registered for the said service and started discharging its Service Tax liability with respect to the said service from financial year 2006-07, and also paid Service Tax for the financial year 2005-06. The same has again been also acknowledged by the DGCEI in the SCN. The absence of any material disclosing intent to evade payment of Service Tax by the appellant is evident by the fact that it promptly made all the payments pertaining to Service Tax liability with respect to Mandap Keeper Service and Management, Maintenance and Repair Service as soon as the appellant became aware of the same (during the enquiry) and continued to pay Service Tax thereafter. The authorities are unanimous that to invoke the extended period under cognate provisions (such as Section 11A of the Excise Act or Section 28A of the Customs Act) the burden is cast upon it to prove suppression of fact. The Revenue has not been able to prove an intention on the part of the appellant to evade tax by suppression of material facts. In fact, it is clear that the appellant did not have any such intention and was acting under bona fide beliefs. For these reasons, it is held that the Revenue cannot invoke the proviso to Section 73(1) of the Finance Act to extend the limitation period for issuing of SCN. The SCN was issued on 24-10-2008. The undischarged liability for payment of Service Tax with respect to Mandap Keeper 38 Service and Management, Maintenance and repair services alleged in the SCN is for the period 2004-06 and 2005-08 respectively. Since the proviso to Section 73(1) cannot be invoked the SCN had to be served within one year from the relevant date. Therefore, the SCN with respect to short payment of Service Tax for Mandap Keeper Service for the years 2004-2006 is barred by limitation. The SCN with respect to short payment of Service Tax for Management, Maintenance and Repair Services for the years 2005-2007 is also barred by limitation." (emphases supplied) Without multiplying authorities suffice to say, similar views have been taken in the decisions in Principal Commissioner of CGST & C.Ex, Mumbai v. Securities and Exchange Board of India, 2023 (385) ELT 865 (Bom.) and Naresh Kumar & Co Pvt Ltd v. UOI, 2014 (36) STR 271 (Cal.).
40. We find that the contention of the appellant that the demand was wholly barred by limitation has been addressed by the adjudicating authority in para 19.0 of the impugned Order in Original, as under:
" 19.0. M/s Noble King were filing ST 3 returns but have been claiming deductions the amount received as mark-up as export of services and have not discharged the duty liability. The facts regarding the non-payment of service tax on the taxable services provided by M/s.Noble King came to the notice of the department only on a detailed investigation. M/s. Noble king was liable to pay service tax since they have provided the said services as an "Intermediary", but they have intentionally not paid the appropriate service tax on the taxable value. Thus, they 39 have suppressed relevant and vital facts from the department with an intention to evade service tax. Further, I find that there is a deliberate intent on the part of ESM Pte Singapore, and M/s. Noble King to delete any direct reference to/use of the word "vendor" in the Agreement dated 1st April, 2016 in order to make it appear that there are only 2 parties involved in the entire range of transactions i.e. ESM Pte Singapore and M/s. Noble King and to escape/avoid duty liability as "Intermediary"
since the nature of services rendered during the entire period remains the same. But for the investigation conducted the fact of non-payment of service tax would not have come to light. Therefore, extended period under proviso to sub-section (1) of Section 73 of Chapter V of the Finance Act, 1994 is rightly invoked in the present case."
41. We also find that the adjudicating authority itself has conceded at para 21 that the appellant has filed the ST3 returns regularly, by recording as under:
" Further, I find that M/s. Noble King have filed the ST3 returns regularly and has mostly complied with the Service tax provisions, I am of the considered view that imposition of penalty under Section 77 is not required."
42. It is also pertinent that the SCN itself under the heading in para 11 "Invocation of Extended Period", thereafter in para 11.1 states that the appellant has not discharged appropriate service tax on the services provided by them to ESM Pte and have 40 erroneously claimed that they have exported the said services thereby resulting in non payment of service tax. To our mind, an erroneous claim is a claim made by mistake, and cannot be equated with a deliberate claim with intent to evade payment duty, which alone would then prove mens-rea, which is essential and required to be proved, to invoke the extended period of limitation.
43. At this juncture, it would be apposite to notice the decision of a coordinate bench of the tribunal in Accurate Chemical Industries v CCE, Noida, reported in 2014(300) ELT 451 (Tri-Del), wherein, the question of the effect of non-scrutiny of the returns filed by the assessee upon self-assessment was examined in detail. The relevant portions are as under:
" 7.1 Though with effect from 1-10-1996, self-assessment has been introduced and the monthly ER-1 return filed by an assessee are not required to be assessed by the Range Superintendent (RO), in terms of the following instructions issued by the Central Board of Excise & Customs (CBEC) not only every ER-1 return filed by an assessee is required to be scrutinized by the RO for correctness of rate of duty applied to the goods cleared, arithmetical accuracy of duties/amounts dues and payable; Cenvat credit availment, valuation etc., this scrutiny must be completed within 3 months and the returns of the units whose annual duty payment is Rs. 1 crore to Rs. 5 crores and more than Rs. 5 crores, are also to be cross checked by the Assistant Commissioner and Additional Commissioner, respectively.
(1) Circular No. 249/83/96-CX., dated 11-10-1996 (para 3); (2) Circular No. 311/27/97-CX., dated 15-4-1997 (regarding maintenance of register of scrutiny and reporting progress of scrutiny of ER-1 returns in monthly Technical Report being sent to the Board.) 41 (3) Circular No. 818/15/2005-CX., dated 15-5-2005 issued by C.B.E.& C. under Rule 12(3) of Central Excise Rules, 2002 prescribing two stage scrutiny of ER-1 and ER-3 returns -
preliminary scrutiny and detailed scrutiny as per detailed check list prescribed for this purpose.
7.2 From the above Circulars of the C.B.E. & C. regarding scrutiny of ER-1 returns, it is clear that the returns filed by an assessee are required to be subjected to detailed scrutiny in course of which the concerned officer can call for the documents from the assessee wherever necessary for scrutiny. Therefore in this case, if the concerned Range officer/Assistant/Deputy Commissioner or concerned Additional Commissioner had checked the returns, the short payment would have been immediately detected as, as observed by the Commissioner in para 4.5 of the impugned order, even the registration certificate of the appellant mentioned them as a unit of Accurate Transformers Ltd., and in all the documents of the appellant, the transfer of goods from the appellant to Accurate Transformer Ltd. had been reflected as inter unit transfer. Neither there is any allegation nor evidence to prove that there was some collusion between the appellant and the Jurisdictional Central Excise officers. The short payment was detected when during visit by the audit team, the records maintained by the appellant and made available by them to the audit officers were examined by them, -
something which should have been done by the Jurisdictional Range Officers and Divisional Assistant Commissioner/Deputy Commissioner much earlier. The assessee cannot be penalized by invoking extended period under proviso to Section 11A(1) for demand of duty and penal provisions of Section 11AC for indolence on the part of the jurisdictional Central Excise officers. Moreover Apex Court in a series of judgments -
CCE v. Chemphar Drugs & Liniments reported in 1989 (40) E.L.T. 276 (S.C.);
Padmini Products v. Collector reported in 1989 (43) E.L.T. 195 (S.C.);
42
Pushpam Pharmaceuticals v. CCE reported in 1995 (78) E.L.T. 401 (S.C.);
Anand Nishikawa Co. Ltd. v. CCE, Meerut reported in 2005 (188) E.L.T. 149 (S.C.);
Continental Foundation Jt. Venture v. CCE, Chandigarh reported in 2007 (216) E.L.T. 177 (S.C.) has held that something positive other than mere inaction or non-payment of duty is required for invoking extended period under proviso to Section 11A(1) and that suppression means failure to disclose full information with intent to evade the payment of duty and mere omission to give certain information is not suppression of fact unless it is deliberate with intention to evade the payment of duty. The above condition for invoking extended period prescribed in these judgments is not satisfied in this case." (emphasis supplied)
44. We are of the view that allowing the assessee to self-assess the tax is a mere facility extended to the assessee. That in no way detracts or dilutes the statutory responsibility of the jurisdictional central excise officers to ensure correctness of the assessment, exemptions claimed and duty payments made. In the instant case, on a perusal of the ST-3 returns available as part of the Appeal records, we find that in the ST-3 returns filed regularly, the Appellants have, under PART B, titled "VALUE OF TAXABLE SERVICE AND SERVICE TAX PAYABLE", against B1.8 titled the "amounts charged against export of service provided or to be provided", duly indicated the amounts in respect of each month in the appropriate place provided for such declaration. The appellant has also indicated in the respective rows thereafter, pursuant to the said particulars indicated in the 43 ST 3 returns, the total amount claimed as deduction, the consequent net taxable value as well as the service tax payable in the appropriate rows and columns as was necessary. Therefore, we are of the considered view that the aforesaid responsibility of the jurisdictional departmental officers to scrutinize the returns filed, reflecting the information of amounts charged against export service provided, and declarations of deductions claimed and service tax payable that has been so declared by the appellant, and the abject failure to take up the information for scrutiny, is not to be held to the detriment of the appellant, by invoking of the extended period of limitation. In view of the mandatory responsibilities cast on the jurisdictional officers by various circulars, they cannot abdicate responsibility, more so when there is complete absence of any evidence that they have indeed embarked on such a scrutiny and called for the necessary information and that the assessee has not responded to their letters seeking such information. In the show cause notice too, there is no whisper of any finding that the returns that the appellant has so regularly filed have been scrutinized and a subsequent allegation that the appellant had not furnished any information that has been sought for consequent to such scrutiny. The mandate of the statute, as laid down in Section 14 of the Central Excise Act, 1944, made applicable under Section 83 of the Finance Act, 1994 in relation to service tax as they apply in relation to a duty of excise, empowers the jurisdictional range officers to issue summons requiring any person to give evidence or produce records etc., and can be resorted to by the 44 said officers in the course of performance of their official duties as per extant Departmental instructions, if it so becomes necessary.
45. Likewise, we find that in a case where revenue had preferred the appeals on the ground that the respondents in their monthly ER returns filed for the relevant period, have simply shown the quantum of credit availed on inputs without specifying the service on which the said credit was availed, and that therefore this would amount to suppression from the department with intent to avail wrongful credit, a co-ordinate bench of this Tribunal in its decision in CCE, Indore v Medicaps Ltd, reported in 2011(24) STR 572 (Tri-Del) has held as under:
4. We find no merits in the above contention of the revenue.
Admittedly the credit availed by the assessee was reflected in the monthly returns. If there is no column in the monthly return to show the nature of service on which the credit was availed, the assessee cannot be blamed for not disclosing the said fact. For invoking the longer period of limitation, there has to be a suppression or mis-statement with an intent to evade payment of duty. When the respondents have reflected the amount of credit availed by them in their monthly returns, it cannot be said that there was any positive act of suppression on misstatement on their part. As such, we are of the view that Commissioner (Appeals) has rightly held a part of the demands as barred by limitation.
46. There is a catena of decisions in similar vein wherein, various High Courts as well as this Tribunal, have consistently held that when the assessee is registered and filing returns regularly, the range officer had a duty to scrutinize returns and detect any irregularity and to raise pertinent queries in this regard and that 45 in the light of any negligence or failure to do so, the allegation of suppression by the assessee cannot be countenanced. To cite a few, apart from those cited above, the decisions in Jagadamba Power & Alloys Ltd v CCE, Jaipur, 2025(391) ELT 478 (Chhattisgarh) affirmed in CCE v Jagadamba Power & Alloys Ltd, 2025 (391) ELT 465 (SC), Swastik Engineering v CCE, Bangalore, 2010 (255) ELT 261 (Tri-
Bang) upheld in CCE Bangalore II v Swastik
Engineering,2014 (302) ELT 333 (Kar) and the latest
decisions of the Principal Bench of the Tribunal at Delhi in Final Order No.50511/2025 dated 23-04-2025 in the case of M/s. Indian Railway Catering and Tourism Corporation Ltd v. The Commissioner of Service Tax, Delhi-I and in Final Order No.50515/2025 dated 23-04-2025 in the case of M/s. Industrial Sales & Services v Commissioner of CGST &Service Tax, Jaipur, would suffice.
47. We are of the view that when the appellant has duly provided all the information sought in the mandatory returns prescribed, it would be all the more reason for a jurisdictional range officer entrusted with the duty to safe guard Government Revenue by verifying and scrutinizing the information being furnished in the returns by the assessee, to be diligent and inquire into the details of such amounts charged against export of service. The very fact that the appellant has claimed and stated that it has made export of service, is reason enough for any officer to then promptly embark on the requisite inquiry within the mandated 46 period prescribed for such scrutiny as laid down in the Department circulars and instructions in order to ensure correctness of the assessment and ensure complete remittance of the requisite duty. In the instant case, the extended period sought to be invoked is from October 2014 to June 2017 and hence, even before the present SCN issued on 25-06-2020 pursuant to investigations commenced on 09-05-2019, there was ample opportunity for the jurisdictional range officers to carry out their mandated responsibility and detect any irregularities, if at all any. In the light of the ratio of the decisions stated supra, when the knowledge of the fact that the appellant has been claiming the said amounts received as towards export of service duly reflecting them in the returns, was already known to the Department, we are of the view that the learned adjudicating authority has egregiously erred in finding that the invoking of the extended period of limitation was tenable.
48. A feeble attempt has been made by the Adjudicating Authority to attribute deliberate intent on the part of the Appellant on the specious ground that the appellant had deleted any direct reference to/use of the word "vendor" in the agreement dated 1st April, 2016 to escape/avoid duty. However, it is pertinent that the intent is attributed thus in the show cause notice stating that it was to escape/avoid duty and not that the appellant had an intent to evade duty, which is the prerequisite to invoke extended period of limitation. Tax avoidance, which is 47 resorted to by businesses by tax planning, and tax evasion which is an illegal activity, are incomparable, like chalk and cheese. In any event, such a statement by the adjudicating authority is a mere ipse dixit, sans any evidence. In fact, the singular statement dated 03-03-2020 recorded from the Head Finance of the Appellant, does not reflect any such intent forthcoming in its content, nor is any such question seen put to him. We hold that the said finding that the appellant had deleted any direct reference to/use of the word "vendor" in the agreement dated 1st April, 2016 to escape/avoid duty, sans any positive evidence on record to substantiate the said finding, is untenable. On the contrary, we note that the Head Finance has stated that they have not paid Service Tax because they have considered their services as "Export of Services" since the service recipient, namely, M/s. ESM Pte Singapore is abroad and the appellant has received the money in foreign exchange. We find that the said bonafide belief expressed is also evidenced by the very fact that the appellant has chosen to declare the amounts received as towards exports of service provided and the consequential service tax payable, in the ST 3 returns filed regularly by the appellants with the Department. For reasons best known to the authorities, these returns have not been scrutinised, or if scrutinized, has not excited them enough to embark on any inquiry within the normal period so as to raise a tenable demand, if any, on the appellant. When it is the responsibility of the jurisdictional departmental officers to scrutinize the returns filed reflecting the information of amounts 48 towards export service provided and service tax payable indicated by the appellant, any failure on their part to take up the information for scrutiny can neither be condoned to the detriment of the appellant, nor would it then justify invoking of the extended period of limitation by the Department. It is also pertinent to note that the Honourable Apex Court in Uniworth Textiles Ltd v CCE, Raipur, 2013 (288) ELT 161 (SC), has held as under:
"24. Further, we are not convinced with the finding of the Tribunal which placed the onus of providing evidence in support of bona fide conduct, by observing that "the appellants had not brought anything on record" to prove their claim of bona fide conduct, on the appellant. It is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. This Court observed in Union of India v. Ashok Kumar & Ors. - (2005) 8 SCC 760 that "it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility." (emphasis supplied)
49. We also find that when the appellant held a bonafide belief that its services were not liable to tax being export of services and had in fact declared the amounts received as towards export of service provided, there cannot be a finding of wilful misstatement or suppression of facts with intent to evade 49 payment of duty attributable to the Appellant. Honourable Supreme Court has often rendered decisions on these lines and apart from those cited in line in the decisions referred supra, the following citations also refer to the same, namely, Commissioner of C.Ex & Customs v. Reliance Industries Ltd, 2023 (385) ELT 481 (SC) and Jayant Juneja v CCE, Jaipur, 2015 (326) ELT 634 (SC).
50. That apart, we also find substance in the appellant's contention that the issues herein, i.e. whether the appellant is an intermediary or not, or whether the appellant's view that inasmuch as they are earning foreign exchange by rendering service to their service recipient abroad, it tantamount to export of service, is a tenable view or not, are all interpretational issues. If the appellant has interpreted the provisions to his benefit, it cannot be said that it was malafide or an act of wilful suppression and in such circumstances too neither can extended period be invoked nor any penalty be imposed. Decisions in International Merchandising Company, LLC v CST, New Delhi, 2022 (67) GSTL 129 (SC) Lanxess ABS Ltd v Commissioner, 2010 (259) ELT 551 (Tri) and Ispat Industries v CCE, Raigad, 2006 (199) ELT 509 (Tri- Mumbai) refers.
51. On a perusal of the ST-3 returns available as part of the Appeal records, we have found that in the ST-3 returns filed regularly, the Appellants have duly indicated therein, the amounts charged 50 against export of service provided in the appropriate place provided for such declaration. The appellant has also indicated the consequent net taxable value as well as the service tax payable, pursuant to the said particulars indicated in the ST 3 returns. The present matter covers the dispute period from October 2014 to June 2017 whereas the SCN was issued only on 25.06.2020. The appellant had filed Service Tax returns for this period on 20.04.2015, 21.10.2012, 22.04.2016, 24.10.2016, 25.04.2017 and 14.08.2017 respectively as is evidenced by the ST-3 returns. As per Section 73(6)(i) (a), where a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed, is the relevant date. Therefore, given that the returns for the relevant period under dispute is from October 2014 to June 2017, when the date of filing of the last return for the said period is 14.08.2017, the normal period of thirty months would come to an end by February 2020. In the aforesaid circumstances when the invoking of extended period of limitation was not available to the Department considering the fact that the appellant had declared the amounts received as towards export of service in the ST 3 returns and the said fact was in the knowledge of the department, therefore, the SCN issued on 25-06-2020 is beyond the normal period of limitation and the entire demand is barred by limitation. The normal period of thirty months when calculated in the reverse from the date of issuance of the SCN which is on 25-06-2020, which could at best have been covered, 51 is only if there was a demand for the period from January 2018 onwards alone. In the present case the service tax returns were all filed well before January 2018 and the period under dispute is also only upto June 2017. Thus, for the reasons we have elucidated supra, the confirmation of the demand of service tax in the instant case, which was for the period from 01.10.2014 to 30.06.2017, was entirely barred by limitation and is therefore wholly unsustainable and is liable to be set aside.
52. Given our findings above that the extended period of limitation was not invokable and that the demand was wholly barred by limitation, we are disinclined to now go into the merits of the dispute for more reasons than one. Firstly, a finding on merits is rendered inconsequential, as the demands are even otherwise unsustainable being wholly barred by limitation. Secondly, there is no question of such a demand under Chapter V of the Finance Act, 1994, recurring in respect of the appellant. Thirdly, with the advent of the GST regime, the Finance Act 1994 has been amended and by virtue of Section 173 of the CGST Act, 2017, Chapter V of the Finance Act, 1994 has been omitted, of course subject to the repeal and savings as provided under Section 174 of the GST Act ibid, and for the proceedings initiated in respect of the appellant for the subsequent period under the prevailing GST Tax regime, it is seen that the Departmental Adjudicating Authority itself has dropped the proceedings rendering a finding in favour of the appellant on merits as evidenced by the Order V/Adj/15-137/DGGI/Nobel king/ADC/CGST Thane/2023-24 52 dated 27-06-2024 and nothing has been brought to our notice to show that the order has not attained finality, Last, but not the least, having found in favour of the appellant on limitation, we are now forbidden from rendering a finding on merits as per the binding judicial precedents cited as under.
53. We find that the Honourable High Court of Allahabad, in Commr of Cus, C.Ex & S.Tax v. Monsanto Manufacturer Pvt Ltd, 2014 (35) STR 177 (All), has held as under:
"20. Though in the appeal by the assessee several questions of law have been framed, the following question has been pressed at the hearing :
"Whether the Tribunal having held that proceedings were barred by limitation and proceedings were liable to be quashed on the ground of limitation, the Tribunal committed an illegality in deciding the question on merits. Hence is the finding of Tribunal on merits liable to be set aside?"
21. The appeal is admitted on the following question of law and is by consent taken up for final hearing.
22. The Tribunal came to the conclusion that the demand by the Revenue was beyond the period of limitation of one year prescribed under Section 73(1) of the Finance Act, 1994 and that the period of five years could not have been invoked. That part of the judgment of the Tribunal has been confirmed in the companion appeal. Once that be the position and the Tribunal having come to the conclusion that the extended period of limitation could not have been validly applied, the Tribunal, 53 in our view, acted outside its jurisdiction in entering upon the merits of the dispute on whether the demand for duty should be confirmed. Once it is held that the demand is time barred, there would be no occasion for the Tribunal to enquire into the merits of the issues raised by the Revenue.
23. In State Bank of India v. B.S. Agricultural Industries (I)- (2009) 5 SCC 121, the Supreme Court dealt with a situation where the consumer forum had held that the complaint was barred by limitation but had nonetheless proceeded to decide the issue on merits. Holding that this would amount to an illegality, the Supreme Court observed :
"12. As a matter of law, the consumer forum must deal with the complaint on merits only if the complaint has been filed within two years from the date of accrual of cause of action and if beyond the said period, the sufficient cause has been shown and delay condoned for the reasons recorded in writing. In other words, it is the duty of the consumer forum to take notice of Section 24A and give effect to it. If the complaint is barred by time and yet, the consumer forum decides the complaint on merits, the forum would be committing an illegality and, therefore, the aggrieved party would be entitled to have such order set aside."
24. Consequently, since the Tribunal was justified, as we have held, in coming to the conclusion that the demand was time barred, there was no occasion for the Tribunal to enter upon the merits of the dispute. We, accordingly, answer the question of law as framed by the assessee in the affirmative and in favour of the assessee.
25. The appeal by the assessee shall stand disposed of in the aforesaid terms." (Emphasis supplied) 54
54. We find that the Honourable Supreme Court in Commissioner of Customs, Mumbai v B.V. Jewels, 2004 (172) ELT 3 (SC), has observed that " If, in reality, the CEGAT found that the action taken by the departmental authorities was beyond the period of limitation, it could have disposed of the appeals before it only on that ground without examining the merits". This decision of the Apex Court in B.V. Jewels ibid has been followed in Commr of Service Tax, Mumbai IV v. Rochem Separations (I) P Ltd, 2019 (366) ELT 103 (Bom). It is also seen that the jurisdictional High Court in E.T.A General Pvt Ltd v Additional Commissioner of C.Ex, Chennai, 2016 (44) STR 409 (Mad) has held as under:
"11. In Commissioner of Customs, Central Excise & Service Tax v. M/s. Monsanto Manufacturer Pvt. Ltd., reported in 2014-TIOL- 550-HC-ALL-ST, while declaring the demand as beyond the period of one year, the Tribunal, entered into the merits of the appeal filed by the assessee and passed an adverse order. Before the Allahabad High Court, one of the substantial questions of law raised by the assessee, was when the Tribunal having held that proceedings were barred by limitation, has committed any illegality in deciding the question on merits. Whether the finding of the Tribunal on merits, is liable to be set aside?"
12. While addressing the above said substantial question of law, decision of the Hon'ble Supreme Court in State Bank of India v. B.S. Agricultural Industries reported in (2009) 5 SCC 121, has been pressed into service, wherein, the Hon'ble Supreme Court had an occasion to deal with a situation, where the consumer 55 forum held that the complaint was barred by limitation, but nonetheless had proceeded to decide the issue on merits. Dealing with the issue, which is similar to the case on hand, at Paragraph 12, the Hon'ble Supreme Court in State Bank of India's case (cited supra), held as follows :-
"12. As a matter of law, the consumer forum must deal with the complaint on merits only if the complaint has been filed within two years from the date of accrual of cause of action and if beyond the said period, the sufficient cause has been shown and delay condoned for the reasons recorded in writing. In other words, it is the duty of the consumer forum to take notice of Section 24A and give effect to it. If the complaint is barred by time and yet, the consumer forum decides the complaint on merits, the forum would be committing an illegality and, therefore, the aggrieved party would be entitled to have such order set aside."
Applying the ratio of the Supreme Court in State Bank of India v. B.S. Agricultural Industries reported in (2009) 5 SCC 121, the Allahabad High Court in Commissioner of Customs, Central Excise & Service Tax v. M/s. Monsanto Manufacturer Pvt. Ltd., reported in 2014-TIOL-550-HC-ALL-ST, answered the question of law in favour of the assessee.
13. Judgment of the Supreme in State Bank of India's case (cited supra), followed in Commissioner of Customs's case (cited supra), squarely applies to the facts on hand, wherein, CESTAT, Madras, while dismissing the appeal as time-barred, has entered into the merits of the case and dismissed the same, on merits. In the words of the Hon'ble Supreme Court, that would be an illegality.
56
14. Though Mr. A.P. Srinivas, learned counsel appearing for the Revenue submitted that the correctness of the order impugned before us, can be decided in an appeal before the CESTAT and prayed to sustain the order, dated 15-2-2016 in W.P. No. 5501 of 2016, in the light of the above discussion and the decision in State Bank of India's case (cited supra), we are not inclined to accept the said contention. When the Hon'ble Supreme Court has described the manner of disposal of an appeal, as illegality, the same can be corrected by this Court, in exercise of the powers under Article 226 of the Constitution of India and no useful purpose would be served in relegating the appellants to approach the alternative remedy. Courts have held that a writ petition is maintainable, when the act committed is per se illegal, and contrary to the statute.
15. In the light of the above discussion and decisions, we are inclined to interfere with the order of the Writ Court as well as the Order-in-Appeal No. 349/2015 (STA-II), dated 30-11-2015, passed by the Commissioner of Service Tax (Appeals-II) and the same are set aside."
55. Given our findings that the demand is wholly barred by limitation for the reasons stated above, adhering to judicial discipline and respectfully following the binding judicial precedents of the Honourable Apex Court and High Courts cited supra, we refrain from delving into the merits of the matter and rendering a finding on merits. In asmuch as we have found the demand unsustainable and liable to be set aside, the 57 consequential demand of interest and penalty imposed is also found to be untenable and liable to be set aside.
56. In the light of our discussions and findings above, we hold that the impugned Order-in-Original No.24/2021(C) dated 26.10.2021 is unsustainable and is hereby set aside. The appeal is allowed with consequential relief in law, if any.
(Order pronounced in open court on 30.05.2025) (AJAYAN T.V.) (VASA SESHAGIRI RAO) Member (Judicial) Member (Technical) vl