Custom, Excise & Service Tax Tribunal
Adyar Gate Hotel Ltd vs Cst Ch on 17 April, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. I
Service Tax Miscellaneous Application No. 41102/2025
and
Service Tax Appeal No.42197 of 2015
(Arising out of Order-in-Original No.01/2015 (ST/CH-IV/Commr) dated
27.07.2015 passed by Commissioner of Service Tax (Appeals-I),
Chennai)
M/s. Adyar Gate Hotel Ltd., .... Appellant
No.132, TTK Road,
Alwarpet,
Chennai-600 018.
VERSUS
Commissioner of GST & Central Excise ... Respondent
Chennai North Commissionerate 29/1, Mahatma Gandhi Road Nungambakkam, Chennai - 600 034.
With
2) Service Tax Miscellaneous Application No. 41103/2025 and Service Tax Appeal No.42288 of 2015 Adyar Gate Hotel Ltd., vs. Commissioner of GST & Central Excise, Chennai North (Arising out of Order-in-Appeal No.198/2015 (STA-II) dated 10.08.2015 passed by Commissioner of Service Tax (Appeals-II), Chennai)
3) Service Tax Miscellaneous Application No.41104/2025 and Service Tax Appeal No.41011 of 2017 Adyar Gate Hotel Ltd., vs. Commissioner of GST & Central Excise, Chennai North (Arising out of Order-in-Original No.CHN-SVTAX-002-COM-8 to 11-2016- 17 dated 27.01.2017 passed by Commissioner of Service Tax, Chennai)
4) Service Tax Appeal Nos.41023 of 2017 Adyar Gate Hotel Ltd., vs. Commissioner of GST & Central Excise, Chennai North (Arising out of Order-in-Original No.CHN-SVTAX-002-COM-8 to 11-2016- 17 dated 27.01.2017 passed by Commissioner of Service Tax, Chennai) 2
5) Service Tax Appeal Nos.41024 of 2017 Adyar Gate Hotel Ltd., vs. Commissioner of GST & Central Excise, Chennai North (Arising out of Order-in-Original No.CHN-SVTAX-002-COM-8 to 11-2016- 17 dated 27.01.2017 passed by Commissioner of Service Tax, Chennai)
6) Service Tax Appeal Nos.41025 of 2017 Adyar Gate Hotel Ltd., vs. Commissioner of GST & Central Excise, Chennai North (Arising out of Order-in-Original No.CHN-SVTAX-002-COM-8 to 11-2016- 17 dated 27.01.2017 passed by Commissioner of Service Tax, Chennai)
7) Service Tax Appeal No.42739 of 2018 Adyar Gate Hotel Ltd., vs. Commissioner of GST & Central Excise, Chennai North (Arising out of Order-in-Appeal No.508/2018 (CTA-I) dated 24.09.2018 passed by Commissioner of GST & Central Excise (Appeals-I), Chennai) APPEARANCE :
Ms. Radhika Chandrasekar, Advocate for the Appellant Shri N. Satyanarayana, Authorized Representative for the Respondent CORAM :
HON'BLE MR. M. AJIT KUMAR, MEMBER (TECHNICAL) HON'BLE MR. AJAYAN T.V., MEMBER (JUDICIAL) FINAL ORDER Nos.40504-40510/2026 DATE OF HEARING: 12.01.2026 DATE OF DECISION: 17.04.2026 Per: Shri Ajayan T.V.
These appeals being interconnected and having similar issues, are therefore heard together and are disposed of by this common order.
2. The relevant facts are that the appellant is a registered service provider of outdoor catering service, mandap keeper service, health club fitness service, dry cleaning service, internet services and renting of immovable property 3 services. During Audit by the officers of CERA, Chennai, it was found that the appellant was receiving architect services from foreign service providers. It was noticed that towards the architectural fees paid to the service providers during the period 2008-2009 to 2009-2010, the appellant while paying service tax under Reverse Charge Mechanism, had excluded the TDS payments from the taxable value. The Department was of the view that thus there was a short payment of service tax. Therefore, a Show Cause Notice (SCN) dated 27-05-2011, was issued demanding service tax along with applicable interest and proposing penalties under Section 76 & 78 of the Finance Act, 1994 (Act). The Notice was issued invoking the extended period of limitation under proviso to Section 73(1) alleging that but for the detailed verification of accounts undertaken by the CERA Officers, Chennai, the facts of short payment would not have come to the notice of the Department. After due process of law, the Adjudicating Authority, vide Order-in-Original (OIO) No. 171/2012, dated 31-08-2012 confirmed the demand and imposed an equivalent penalty under Section 78 of the Act. Aggrieved, the appellant preferred an appeal before the Commissioner of Service Tax, (Appeals-II), Chennai. However, the Appellate Authority, vide Order-in-Appeal (OIA) No. 198/2015 (STA-II), dated 10-08-2015, rejected the Appeal and upheld the said OIO. The appellant challenged the said OIA of the Appellate Authority in Appeal No. ST/42288/2015 before this Tribunal.
3. The appellant was thereafter issued a SCN No.309/2012, dated 15-10-2012, alleging that on verification of the appellant's ledger accounts, profit and loss accounts and other private records, it was noticed that the appellant had received maintenance and repair service, air travel agent service, technical inspection and certification service, architect services and business auxiliary service from various 4 service providers situated abroad for which the appellant had made payments in foreign currencies to the said foreign companies. Though the appellant had reflected the service tax paid in respect of architect service and business auxiliary service that has been received from abroad in their ST3 returns, however, they had not included the TDS portion in computing the taxable value and in respect of the remaining services, the appellant had not paid any service tax including the TDS paid by the appellant on such expenditure. It was also noticed that the appellant had wrongly availed cenvat credit of service tax paid under renting of immovable property in respect of a premise not registered under the appellant's registration certificate and from which the appellant was not providing any output service. The department was also of the opinion that, but for the visit of the audit group, the above said non-payment/short payment of service tax and wrong availment of cenvat credit and its wrong utilization would not have been come to light and therefore invoking of the extended period of limitation under proviso to Section 73(1) was warranted. The SCN covered the period from April 2007 to March 2011 and also proposed demand of applicable interest and imposition of penalty under Rule 15 (3) of Cenvat credit Rules, 2004 (CCR), read with Section 78 of the Act. After due process of law, the Adjudicating Authority vide OIO No.1/2015 dated 27.07.2015 confirmed the demands along with applicable interest and imposed equivalent penalties under Section 78 of the Act. Aggrieved, the appellant has preferred the appeal numbered as ST/ 42197/2015.
4. Thereafter, the appellant was issued a Statement of Demand (SOD) No. 104/2013, dated 18-04-2013, referring to the previous SCN No.309/2012, dated 15-10-2012 and relying on the allegations therein, the SOD proposed denial of cenvat credit of service tax paid on renting of immovable 5 property and also demand of Service Tax on the allied services received from foreign service providers under various categories. This was followed by SOD No.25/2014 dated 16.07.2014 for the period April to June 2012, SOD No.247/2014 dated 18.09.2014 for the period July 2012 to Mach 2013 and SOD No.5/2015 dated 09.01.2015 for the period April 2013 to September 2014, all of which proposed denial of cenvat credit on service tax paid under the renting of immovable property. After due process of law, these 4 SODs were adjudicated by the Commissioner of Service Tax-II, Chennai, vide a common OIO No.CHN-SVTAX-002-
COM-8-11-2016-2017 dated 27.01.2017, whereby the Adjudicating Authority confirmed the demands and imposed penalties under Section 76 of the Finance Act, read with Rule 15(1) of CCR, as more particularly specified therein. Aggrieved, the appellant preferred appeals that came to be numbered as ST/41011/2017, ST/41023-41025/2017.
5. Subsequently, another SOD No.4/2017 dated 13.10.2017 was issued covering the period October 2014 to June 2017, wherein the earlier SCN No.309/2012 dated 15.10.2012 as well as the subsequent SODs were referred. This SOD also proposed denial of cenvat credit on service tax paid under renting of immovable property. After due process of law, the adjudicator vide OIO No. 1/2018 dated 13.4.2018, confirmed the demand and imposed equivalent penalty under Section 76 of the Act read with Rule 15 of CCR. Aggrieved, the appellant preferred an appeal before Commission of GST and Central Excise (Appeals-I). However, the Appellant Authority vide OIA number 508/2018 (CTA-I) dated 24.09.2018 rejected the appeal and upheld the order of the adjudicator. Aggrieved, the appellant preferred an appeal which is numbered as ST /42739/ 2018.
6. Ms. Radhika Chandrasekhar, Ld. Advocate appearing on behalf of the appellant in all these appeals, submitted that 6 the multiple SCNs and SODs issued pursuant to audit of the appellant's records, covered the period from April 2007 to June 2017, and proposed demands on the following grounds:
i) Demand of short payment of service tax under Reverse Charge Mechanism with respect to architect service alleging non-payment of service tax on TDS payments.
ii) Demand of service tax under management, maintenance and repair service, technical inspection certification service, air travel agency service etc. under Reverse Charge Mechanism without bifurcating the consideration/amounts under each category and
iii) Denial of cenvat credit of Service Tax paid under renting of immovable property on the ground that the said premises is not registered under the appellant's registration certificate and from which the appellant was not providing any output service.
7. Ld. Counsel would submit that, as regards the demand on TDS amount, the service tax demand is incorrect as the appellant had in fact discharged the Service Tax on the entire consideration paid to the foreign service providers, in terms of the agreement entered into by the appellant and the foreign service providers. The TDS amount has been discharged separately by the appellant. In other words, if the consideration payable is Rs.100/-, the appellant has discharged the Service Tax on the said consideration and if the TDS on the said consideration is Rs.10/-, that has been paid separately to the Government of India. Ld. Counsel argues that as per Section 67 of the Act, the service tax is payable only on the amount which is charged to the service provider. As per Rule 7 of the Service Tax (Determination of Value) Rules, 2006 value of taxable service received under 7 Section 66A shall be the actual consideration charged for the services provided or to be provided. Reliance is placed on the decisions in Magarpatta Township (2016) 43 STR 132, Final Order No.42344/2021 dated 24.09.2021 in the case of Indian Additives Ltd. vs. Commissioner of GST & CE, and Final Order No.40783-84/2024 dated 02.07.2024 in the case of Indian Additives Ltd. vs. Commissioner of GST & CE, in this regard.
8. In asmuch as the Appellant had also since moved miscellaneous applications in the respective appeals, raising common legal grounds as applicable, namely, (1) that, though the demand of service tax is under reverse charge mechanism invoking Section 66A of the Act and Rule 2(1)(d)(iv) of the Service Tax Rules, there is no reference to the Taxation of Services (Provided from outside India and Received in India) Rules, 2006; (2) that the SCN is vague as there is no bifurcation of the consideration/amount for each of the services under which the demand is made, and (3) that there cannot be a demand of service tax on the basis of P & L account; which were taken on record and submissions were allowed to be made; Ld. Counsel urges that the SCNs issued without referring to the Taxation of Service (Provided from outside India and Received in India) Rules, 2006 vitiates the SCN as the demand cannot sustain without the appellant being put to notice of the said Rules and the particular subrule that would apply in order to find the services taxable. Ld. Counsel would submit that a demand of Rs. 1,01,33,433/- along with interest and equivalent penalty has been made without bifurcation of the Service Tax amount for each of these services for which the demand is made. That apart, she would submit that though the demand of Service Tax is under Reverse Charge Mechanism pertaining to services received from foreign service providers and Section 66A of the Finance Act as well as Rule 8 2(1)(d)(iv) of Service Tax Rules have been invoked, however the SCN does not refer to the Taxation of Services (provided from outside India and received in India (Rules, 2006) under which the demand has to be raised. In support of her contentions that the SCN was vague and that break-up of the consideration and the services for which they were rendered had not been provided, Ld. Counsel placed reliance on the decisions in CCE v. Brindavan Beverages, 2007 (213) ELT 487, Dharambir Singh & Co v CC, Noida, 2018(8) GSTL 440 (Tri-All), CCE & ST, Pondicherry v A.M. Manickam and others, (2017) 6 TMI 57 and Final Order No.40964/2023 dated 31.10.2023 in the case of Mayakrishnan v CCE &ST.
9. It is also her submission that service tax demand cannot be made on the basis of P and L account. Reliance is placed on the decisions in Firm Foundations & Housing Pvt. Ltd. vs. PR. CST (2018) 16 GSTL 209, Jain Housing & Construction Ltd. vs. Commissioner of Service Tax (2023) 10 Centax 170 (Tri. Mad.), Go Bindas Entertainment Pvt. Ltd. vs Commissioner of ST, Noida 2019 (27) GSTL 397 (Tri. All) and Umesh Tilak Yadhav vs. Commissioner of Central Excise, Nagpur (2024) 15 Centax 161 (Tri. Bom) in this regard.
10. Ld. Counsel further urges that the issue is revenue neutral in asmuch as, even if there is a service tax liability, the appellant is eligible to avail the cenvat credit and as such, the appellant could not have achieved any benefit. Since, the entire issue is revenue neutral, the demand is not sustainable. Reliance is placed on the decision in Final Order No.40436/2023 dated 15.06.2023, in the case of Renault Nissan Automotive India Pvt. Ltd.
11. It is also her contention that the denial of cenvat credit on the premises for which the service tax on renting of 9 immovable property was paid was incorrect. Submitting a copy of the lease deed for the said premises, Ld. Counsel argues that the appellant used the premises as a storage facility for business and the same is available in accordance with law. Reliance is placed the decision of CCE vs, Ultratech Cement limited, 2010-TIOL- 745. She also submits that no one-to-one correlation/nexus between the credit utilised and the Service Tax paid is required to be made. Reliance in this regard is placed on the Final Order No.11629/2023, dated 1-8-2023 in the case of CE & ST, Daman versus AGS Transact Technologies Ltd. It is also her submission that there is no requirement under law that the input services must be received within registered premises. Reliance is placed on the Final Order No. 41159-41160/2024, dated 30-08-2024, in the case of AutoTech Industries (I) Pvt. Ltd. versus The Commissioner of CGST and CE for the said proposition.
12. Ld. Counsel further argues that the extended period is not invocable in as much as none of the ingredients namely fraud, collusion, willful misstatement, suppression of facts, contravention of any of the provisions of the Chapter or of the Rules made thereunder with intent to evade payment of Service Tax, was present. Since the department had already invoked the extended period of limitation in the first Show Cause Notice, the department could not have invoked the extended period in the subsequent notice or the subsequent period again as the department is aware of the activities of the appellant. Reliance is placed on the decisions in Nizam Sugar Factory vs. CCE (2006) 197 ELT 465 (SC) and ECE Industries Ltd. vs. CCE (2004) 164 ELT 236 in this regard. Ld. Counsel further argues that insofar as the demand issued under SCN dated 15-10-2012 was concerned, it is wholly barred by limitation and the demand vide SOD No.04/2017 dated 13.10.2017 is partly barred by limitation for the period October 2014 to September 2015 10 and there was also no invocation of extended period in the SOD. Ld. Counsel also prays for the benefit of Section 80, insofar as the penalties imposed are concerned stating that issue involves questions of interpretation of rules and availment of cenvat credit.
13. Shri N. Satyanarayana, Ld. Authorized Representative, appearing for the Respondent, takes us through the findings in the orders impugned in the respective appeals and reiterates the same.
14. We have heard the rival submissions and carefully perused the material available on record.
15. The issues that arise for our determination are :
1) Whether the demand of short payment of service tax under Reverse Charge Mechanism with respect to architect service alleging non-payment of service tax on TDS payments in this respect is correct?
2) Whether the demand of service tax under management, maintenance and repair service, technical inspection certification service, air travel agency service etc. under Reverse Charge Mechanism without bifurcating the consideration/amounts under each category is tenable?
3) Whether the denial of cenvat credit of Service Tax paid on renting of immovable property of the premises leased by the appellant on the ground that the said premises is not registered under the appellant's registration certificate and that the appellant was not providing any output service therefrom, is proper?
4) Whether the invoking of extended period of limitation is tenable?11
16. At the outset, we find that the miscellaneous applications filed by the Appellant raise questions of law that have a bearing on the tax liability and the tenability of the proceedings. It is no more res-integra that this Tribunal has jurisdiction to examine such questions of law neither raised before the lower authorities nor in the appeal memorandum but are now sought to be raised. Rule 10 of the CESTAT (Procedure) Rules, 1982 allows the parties to urge ground not taken in the appeal provided the Tribunal grants leave to the parties to do so. In fact, the Tribunal has also been given a wide power to decide the appeal on grounds not taken in the memorandum of appeal, with this power being circumscribed only by the requirement that the party affected must be given an opportunity of being heard in respect of the new grounds sought to be urged. The decisions in National Thermal Power Co. Ltd v. CIT, 1998 (99) ELT 200 (SC) and Devengare Cotton Mills Ltd v. CCE, Belgaum, 2006 (198) ELT 482 (SC) lay down the aforesaid propositions. Thus, we have permitted the grounds to be urged at the Bar and find them germane to decide this lis.
17. It has been urged by the Ld. Counsel that though the demand of Service Tax is under Reverse Charge Mechanism pertaining to services received from foreign service providers and Section 66A of the Finance Act as well as Rule 2(1)(d)(iv) of Service Tax Rules have been invoked, however the SCN does not refer to the Taxation of Services (provided from outside India and received in India (Rules, 2006) under which the demand has to be raised and has thereby failed to put the appellant to notice of the manner in which the taxability has arisen. We find merits in this submission for reasons elaborated infra.
18. Section 66A provides that when any service specified in clause (105) of section 65 is provided by a service provider 12 from outside India to a recipient in India, such service shall, for the purposes of this section, be the taxable service, and such taxable service shall be treated as if the recipient had himself provided the service in India, and accordingly, all the provisions of Chapter V of the Act shall apply. Rule 2(d)(i)(iv) stipulates that the "person liable for paying the service tax" means in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under Section 66A of the Act, the recipient of such service. It is therefore evident that, Section 66A read with Rule 2(d)(i)(iv), only identifies the service specified in section 65(105) as the taxable service while providing for a deeming fiction of treating the recipient himself as the provider of such service, and Rule 2(d)(i)(iv) of the Service Tax Rules, identifies the recipient as the person liable for paying the service tax. However, it is only the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, made by the Central Government in exercise of the powers conferred by sections 93 and 94, read with section 66A of the Finance Act, 1994 that makes certain services, identified as per the sub-clauses of Section 65(105), specified in the three limbs of Rule 3; and performed in accordance with the prescriptions therein, that is viz., in relation to the object of the service (immovable property), place of performance and location of the recipient; exigible to service tax. For example, Rule 3(iii) of Taxation of Services (Provided from Outside India and Received in India), Rules 2006 includes 'business auxiliary services', but is restricted to such as are received by a recipient located in India for use in relation to business or commerce. That is to say, if the business auxiliary services received by the recipient were other than for the purpose of use in business or commerce, they are not chargeable to service tax. Therefore, the ascertainment of taxability of the services 13 alleged to be received by the recipient with determination that they satisfy the requirement under any one of the three limbs of Rule 3 of the said Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, was a sine qua non to foist a liability of tax on the Appellant. Therefore, the SCNs suffer from a fundamental and incurable lacunae of having not put the appellant to notice of the applicable limb of Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, and vitiate the consequent proceedings. The impugned orders holding the appellant liable to short paid/non paid tax under reverse charge mechanism for various services are unsustainable on this count alone.
19. Yet another ground of challenge is that the demand of service tax under management, maintenance and repair service, technical inspection certification service, air travel agency service etc. under Reverse Charge Mechanism have been so made without bifurcating the consideration/amounts under each category. We notice that the SCN No.309/2012 dated 15.10.2012 merely details the total amount paid in foreign currency as taken from the Profit & Loss Accounts of the appellant and computes the service tax liability thereon.
20. It is settled that in order to render a transaction liable to service tax, the nexus between the activity of service undertaken and the consideration therefore agreed to, has to be identified. It has to be established that a specified consideration has been agreed upon which has to be paid by the service recipient as quid pro quo for the service provider providing any service, and such payment of consideration cannot be assumed. It therefore becomes necessary not only to identify the taxable service as such in accordance with the definitions under the Act, but also to identify as to what was the mutually agreed upon consideration, its nature and 14 quantum, and to also evidence its payment and receipt. Concededly, the genesis of the present case is in an audit of the appellant's records. The SCN does not allege that there has been non-cooperation, or that the appellant has not produced the relevant records when asked for, either by the audit party or later by the Department. Admittedly, the amounts have been computed on the basis of perusal of the appellant's records. In any event, the Act provides ample powers including provisions of Section 14 of the Central Excise Act, 1944 made applicable by virtue of Section 83 of the Act as well as powers of search under Section 82 of the Act, for the officers to call for information and if necessary, search and seize the requisite evidence, if it is not readily forthcoming. We are therefore of the view that the officers were not handicapped to seek and obtain the information and evidence required to issue a legally sustainable SCN. When there is no difficulty that has been stated to hamper the inquiry, the disinclination to employ the ample investigative powers conferred by the Act cannot provide a justification for issuing a vague SCN. When the Department has chosen to demand service tax only on the figures taken from the financial statements (profit and loss account) and not from the invoices raised by the appellant, even though the appellant was admittedly audited, it is indicative of a failure of the Department, more so when there is no stated difficulty in collecting and collating the requisite evidence in respect of each such service received from the foreign service provider. In fact, it is rather appalling that the consideration paid in respect of the various services alleged to have been rendered by the foreign service providers have not been separately identified, and the corresponding service tax dues payable thereon under reverse charge mechanism, quantified and put to the notice of the appellant.
1521. It is also well settled that the show cause notice is the foundation on which the department has to build up its case. The reliance placed on the decision in CCE v. Brindavan Beverages, 2007 (213) ELT 487, is apposite. The Apex Court has held that if the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the Noticee was not given proper opportunity to meet the allegations indicated in the show cause notice. Evidently, an SCN cannot be issued on a wing and a prayer. The assessee ought to be put to notice of the relevant statutory provisions applicable for the period, detailing how and why the said provisions stood attracted, along with evidence substantiating the department's contentions/allegations, which would then be the foundation that establishes a tenable demand. When such a foundation in the notice, which is the basis of any proceedings, itself is hollow, any attempt to raise a superstructure thereon is futile. An SCN that suffers from such an inherent incurable infirmity is defective and cannot be sustained. We are therefore of the firm opinion that the contested demand of service tax under management, maintenance and repair service, technical inspection certification service, air travel agency service etc. under reverse charge mechanism; that has been so confirmed on the basis of an SCN which has not only not put the appellant to notice of the applicable limb of Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, but also has failed to isolate and quantify the consideration/amounts paid to the foreign service provider in respect of the alleged services received; is therefore wholly unsustainable and is liable to be set aside. The reliance placed on the decisions in Dharambir Singh & Co v CC, Noida, 2018(8) GSTL 440 (Tri-All), CCE & ST, Pondicherry v A.M. Manickam and others, (2017) 6 TMI 57 and Final Order No.40964/2023 16 dated 31.10.2023 in the case of Mayakrishnan v CCE &ST in this regard is found to be apposite.
22. As regards the demand on account of the alleged short payment of service tax under Reverse Charge Mechanism with respect to architect service alleging non-payment of service tax on TDS payments, we find that, apart from the factum of the SCN not putting the appellant to notice of the applicable limb of Rule 3 of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, which by itself renders the demand untenable as held by us above, it is also seen that there is no allegation in the SCN that the appellant has discharged the service tax only on the amount net of TDS. The appellant's contention that it has discharged service tax on the gross amount paid to the service provider for the services and that the TDS amount paid separately does not constitute consideration has remained uncontroverted. The issue is no longer res-integra and we find that in the decision in Final Order No.40783- 84/2024 dated 02.07.2024 in the case of Indian Additives Ltd. vs. Commissioner of GST & CE, it has been held by the Tribunal, relying on an earlier case of Adani Bunkering Pvt Ltd v. CCE, Ahmedabad-II, 2024 (1) TMI 984-CESTAT AHMEDABAD-II, that TDS deposited to the Income Tax Department in relation to the payment made to the foreign service provider over and above the invoice value of the services, is not liable to service tax. The reliance placed by the appellant on similar decisions as noted above, are also appropriate.
23. We are also of the considered view that determination of taxability on the basis of accounting entries in the P & L account and assessing it to tax on this count on an assumptive basis, is alien to the Finance Act 1994 and therefore the contention of the appellant on this count that 17 such a presumptive demand would not sustain, deserves to be accepted. In this regard, the reliance placed on the decision in Firm Foundations & Housing Pvt. Ltd. vs. PR. CST (2018) 16 GSTL 209, Go Bindas Entertainment Pvt. Ltd. vs Commissioner of ST, Noida 2019 (27) GSTL 397 (Tri. All) and other decisions noted above, is found to be appropriate. Similar view is also seen taken by the Tribunal in Indian Machine Tools Manufacturers Association v. CCE, Panchkula, (2023) 11 Centax 213 (Tri-Chan), M/s. International Clearing & Shipping Agency v CGST & CE, Chennai North Commissionerate, 2025 (2) TMI 615-CESTAT CHENNAI and M/s. Sindhu Cargo Services Pvt Ltd v. Commissioner of CGST & ST, Chennai, 2025 (5) TMI 263- CESTAT CHENNAI.
24. Coming to the issue of denial of cenvat credit of Service Tax paid under renting of immovable property, we find that it is the contention of the appellant that the appellant used the premises as a storage facility for business. The appellant has also produced a copy of the lease deed for the said premises indicating it has been let out as a Godown for business of the appellant. In such circumstances, given the nature of the services rendered by the appellant, we find no reason to disbelieve the appellant's contention that it is using the said premises for providing its output service. The reliance placed on the decisions in CCE vs, Ultratech Cement limited, 2010-TIOL- 745 is also appropriate. Even post 01-04- 2011, if the input service is being used for rendering output service, as is found to be the appellant's case, the credit taken cannot be denied. The reliance placed on the Final Order No.11629/2023, dated 1-8-2023 in the case of CE & ST, Daman versus AGS Transact Technologies Ltd for the contention that no one-to-one correlation/nexus between the credit utilised and the Service Tax paid is required to be made, and the reliance placed on the Final Order No. 41159-41160/2024, dated 30-08-2024, in 18 the case of AutoTech Industries (I) Pvt. Ltd. versus The Commissioner of CGST and CE for the proposition that there is no requirement under law that the input services must be received within registered premises, also support the case of the appellant.
25. As regards the appellant's contention on the plea of invoking the extended period of limitation, we find that it has been contended that the demand on Cenvat credit taken on renting of immovable property, vide SOD No.04/2017 dated 13.10.2017 is partly barred by limitation for the period October 2014 to September 2015 and that there was also no invocation of extended period in the SOD. This contention of the appellant is misconceived as we find that Section 73 stands amended by the Finance Act 2016 with effect from 14-05-2016, enhancing the time limit for issuance of SCN for demands within the normal period from eighteen months to thirty months and as on date of issuance of the SOD, i.e., 13.10.2017, according to the amended provisions of Section 73 applicable, the SOD was within the period of limitation, as rightly held by the adjudicating authority. Be that as it may, the demand raised therein is unsustainable in view of our findings above. However, insofar as the demand issued under SCN dated 15-10-2012 was concerned, we concur with the contention of the appellant that it is wholly barred by limitation for the reasons given below.
26. It is undisputable that the genesis of the demand is in the audit of the appellant conducted. It is apposite at this juncture to notice that the Hon'ble High Court of Bombay in the decision in Rajkumar Forge Ltd v. UOI, 2010 (262) ELT 155 (Bom) after noticing that the petitioner's factory was audited and the audit objections were replied to, held that in the light of the audit carried out by the Respondents of the Petitioners' factory and the correspondence that is addressed by the Petitioners to the Respondents, it cannot 19 be said that the Petitioners have misstated facts or there is fraud practiced by the petitioners and held in favour of the petitioners on limitation. Likewise, in CCE, Bangalore v. Pragathi Concrete Products Ltd, 2015 (322) ELT 819 (SC), the Apex Court has held as under
"3. It is also found as a matter of fact, that the unit of the respondent was audited during this period several times and there were physical inspections by the Department as well. Therefore, there could not be any case of suppression. We are in agreement with the aforesaid view taken by the CESTAT. As a result, this appeal is dismissed."
The decisions in Bharati Televentures Ltd v. CCE, Pune III, 2014 (33)STR 86 (Tri-Mumbai), as well as the decision of the Principal Bench of the Tribunal in Delhi Airport metro Express Pvt Ltd v. CCE & Customs, Rohtak, (2024) 25 Centax 238 (Tri-Del) have also held that when audit has been conducted and the records of the appellant has been examined, in such a situation it is not permissible for the department to take recourse to the extended period of limitation contemplated under the proviso to Section 73(1) of the Act.
27. In any event, when the Department had issued the first SCN No.259/2010 dated 27.05.2011 invoking the extended period of limitation, the Department was aware of the activities of the appellant and therefore extended period could not have been invoked in the subsequent SCN No.309/2012 ibid for the later period. The reliance placed on the decisions in Nizam Sugar Factory v. CCE, 2006 (197) ELT 465 (SC) and ECE Industries Ltd v. CCE, 2004 (164) ELT 236 (SC), is appropriate in this regard.
28. Furthermore, we also find that there is no evidence let in of any positive act of suppression or wilful misstatement with intent to evade payment of service tax on the part of the appellant, and thus the ingredients required to invoke 20 extended period of limitation has not been established by the Department. 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. In light of the ratio of the decisions in CCE v. H.M.M. Ltd, 1995 (76) ELT 497, Pushpam Pharmaceuticals Company v CCE, Bombay, 1995 (78) ELT 401 (SC) and Uniworth Textiles v CCE, Raipur, 2013 (288) ELT 161 (SC), we hold that the Department has erred in invoking the extended period of limitation even when issuing the SCN No.259/2010 dated 27.05.2011. We also find force in the contentions of the learned counsel for the appellant that the issues of availment of cenvat credit involved was of interpretational nature and therefore the allegation of malafide made to invoke the extended period of limitation and impose penalties are untenable.
29. In as much as we have found the orders impugned in all these Appeals are unsustainable, the demands of service tax are held to be unsustainable and liable to be set aside. Resultantly, the demand of consequential interest as well as the imposition of penalties are also held to be untenable and liable to be set aside. In view of our discussions and analysis above, the impugned orders are set aside. The miscellaneous applications stand disposed of.
The Appeals are allowed with consequential reliefs in law, if any.
(Order pronounced in the open court on 17.04.2026) (AJAYAN T.V.) (M. AJIT KUMAR) Member (Judicial) Member (Technical) vl