Custom, Excise & Service Tax Tribunal
Central Industrial Security Force vs Ce & Cgst Greater Noida, Noida -Ii on 13 August, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.II
Service Tax Appeal No.70225 of 2024
(Arising out of Order-in-Original No.03/Commr/GBN/2021-22 dated
30/12/2021 passed by Commissioner of Central Excise & Service Tax, Noida)
M/s Central Industrial Security Force, .....Appellant
(Narora Atomic Power Station, Narora)
VERSUS
Commissioner of Central Excise &
CGST, Gautam Budh Nagar ....Respondent
(3rd Floor, Wegmans Business Park, Noida-201306)
APPEARANCE:
Shri Gopal Verma, Advocate for the Appellant
Smt Chitra Srivastava, Authorised Representative for the Respondent
CORAM: HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NO.70572/2025
DATE OF HEARING : 09 May, 2025
DATE OF PRONOUNCEMENT : 13 August, 2025
SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Original
No.03/Commr/GBN/2021-22 dated 30/12/2021 passed by
Commissioner of Central Excise & Service Tax, Noida. By the
impugned order following has been held:-
"ORDER
(i) I drop the demand of Rs. 1,46,36,533/- [Rupees One
Crore Forty Six Lakh Thirty Six Thousand Five
Hundred Thirty Three only] against M/s Central
Industrial Security Force, Unit- Narora Atomic Power
Station, Narora, Bulandshahar.
(ii) I confirm the demand of Interest of Rs. 2,09,760/-
(Rupees Two Lakh Nine Thousand Seven Hundred
Service Tax Appeal No.70225 of 2024
2
Sixty only) under Section 75 of the Finance Act,
1994.
(iii) I order to recover late fee of Rs. 2,000/- (Rupees
Two Thousand only) under Section 70 of the Finance
Act, 1994 read with Rule 7(c) of the Service Tax
Rules, 1994."
2.1 Appellant is engaged in providing security services to
Narora Atomic Power Station, Narora, Bulandshahar defined
under Section 65 (94) and 65 (105) (w) of the Finance Act,
1994.
2.2 During the course of audit of the records of the appellant
following observation have been made:-
"1. The party has not paid interest on delayed payment of
Service Tax for the period April 09 to Jan. 10. On being
pointed out the party Informed that since the cost of
deployment is reimbursed by Narora Atomic Power Station
Narora, to whom they are providing the services, the
interest also will have to be paid/reimbursed by the NAPS
and they will write to the NAPS regarding the same.
2. The party has filed ST-3 returns for the period 4/2009
to 9/2009 on 27.04.2010. Thus they are liable for
depositing the late fees as per Rule 7 (C) of the Service
Tax Rules. The party have not deposited the late fees till
date.
3. On perusal of the ledger obtained from NAPS for the
period April 09 to Dec. 2012, it was noticed that CISF has
been reimbursed, by the NAPS, amount of Rs.
11,73,97,318/- under the heads of 'medical bills, purchase
of stationary and wall paper, dog treatment charge.
supervision charges, oil used for CISF etc. in addition to
the cost of deployment plus service Tax."
2.3 After making inquiries and in investigations, show cause
notice dated 09.01.2014 was issued to the appellant, asking
them to show cause as to why-
"(a) Service tax in the tune of Rs. 1,46,36,533/- (including
Edu. Cess and Higher Edu. Cess) being service tax not
Service Tax Appeal No.70225 of 2024
3
paid, during the period from April 2009 to Dec. 2012
should not be demanded and recovered from them under
proviso to sub- Section (1) of Section 73 of Finance Act,
1994.
(b) Interest on Rs. 1,46,36,533/- as above under Section
75 of Finance Act, 1994 at applicable rates, should not be
recovered from them,
(c) Interest of Rs.2,09,760/- on late payment of Service
Tax paid for the period April, 2009 to Jan, 2010, under
Section 75 of Finance Act, 1994 should not be recovered
from them.
(d) Penalty Rs.2000/- under Section 70 read with Rule 7(c)
for late filing of ST-3 return for the period April 2009 to
Oct. 2009, should not be recovered from them and
(e) Penalty should not be imposed upon them under
section 76 and 78 for their various acts of omission and
commission, as mentioned in the preceding paras."
2.4 The said show cause notice was adjudicated as per the
Order-in-Original dated 26.09.2014 wherein following has been
held:-
"ORDER
(a) I confirmed the demand of Service tax in the tune of
Rs.1,46,36,533/-(including Edu. Cess and Higher Edu.
Cess) being service tax not paid, during the period from
April 2009 to Dec. 2012 under Section 73 (2) of Finance
Act, 1994.
(b) I order the recovery of interest as prescribed rates on
the above amount under the provisions of Section 75 of
the Finance Act, 1994 as amended.
(c) I order the recovery of interest of Rs.2,09,760/- on late
payment of Service Tax paid for the period April, 2009 to
Jan, 2010, under Section 75 of Finance Act, 1994.
Service Tax Appeal No.70225 of 2024
4
(d) I also order for penalty of Rs.2000/- under Section 70
read with Rule 7(c) for late filing of ST-3 return for the
period April 2009 to Oct. 2009.
(e) I impose penalty of. 1,46,36,533/- upon them under
section 78 of the act ibid for their various acts of omission
and commission, as mentioned in the preceding paras."
2.5 Aggrieved appellant have filed appeal before this Tribunal
and the Tribunal vide Final Order No.71323/2019 dated 26 June,
2019 has held as follows:-
"2. The disputed issue relates to the addition of
reimbursable expense into accessible value of the services
being provided by the appellant. We find that the disputed
issue stands decided by various decisions of the Hon‟ble
High Courts including Hon‟ble Supreme Court in the case of
Union of India V/s Inter Continental (India) reported as
2008 (226) E.L.T. 16 (S.C.). The applicability of the said
decision is required to be verified and examined as also
types of expenses being claimed by the appellant as
reimbursable. As such, we deem it fit to set aside the
impugned order and remand the matter to the
Adjudicating Authority for fresh decision in the light of the
precedent judgments upon which the appellant may chose
to rely upon. Needless to say they would be given an
opportunity to put forth their case. We also make it clear
that all the issues are left open for reconsideration by the
Adjudicating Authority."
2.6 In the remand proceedings, matter has been decided by
the impugned order referred in para 1 above.
2.7 Aggrieved appellant have filed this appeal.
3.1 I have heard Shri Gopal Verma, Advocate appearing for
the appellant and Smt Chitra Srivastava Authorized
Representative appearing for the revenue.
4.1 I have considered the impugned orders along with the
submissions made in appeal and during the course of argument.
Service Tax Appeal No.70225 of 2024
5
4.2 For confirming interest on demand of Rs.2,09,760/- and
late fee, impugned order records as follows:-
"23. So far as issue of recovery of interest of
Rs.2,09,760/- on delayed payment of service tax for the
period April 2009 to January 2010 by the party is
concerned, the party has pleaded that the delay in
payment of service tax was due to administrative reasons
and the mistake was technical in nature. I find that the
provisions of levy interest on delayed payment of service
tax are very clear. I found on the bare perusal of Section
75 of the Act provides that when any person, who is liable
to pay service tax as per the provisions of Section 68 of
the Act, fails to pay service tax, then the person is liable to
pay interest at the prescribed rate. In this regard, I find
that the charging of interest is mandatory as held in many
cases including the case of Vadivambigai Textile Mills Ltd.
Vs Commissioner of Central Excise as reported in 179 ELT
151 (Mad); TCP Ltd. Vs CCE (2006) 6 STT 17 Chennai -
CESTAT); Ramanasekar Steels Ltd Vs CCE (2006) 4 STT
355 (Channai CESTAT) and in case of Bailapur Industries
Limited Vs CCE as reported in 2007 (5) STR 197 (Mum
Trib.). 1 also find that the Apex Court has held in the case
of Kerala State Electricity Board Vs CCE as reported in
2008 (9) STR 3 (SC) that the payment of interest follows
delayed payment of tax and has no relevance as to the
status of the person making the payment of tax.
In the light of above judicial pronouncements, I hold that
the interest of Rs. 2,09,760/ is recoverable from the party
under the provisions of Section 75 of the said Act.
24. Now, I proceed to discuss the issue of recovery of late
fee for delayed filing of ST-3 return. The party has pleaded
that the delay in filing ST-3 return was caused due to
administrative reasons and the mistake is technical in
nature. I have gone through the provisions of section 70 of
the Finance Act, 1994 and Rule 7C of the Service Tax
Service Tax Appeal No.70225 of 2024
6
Rules, 1994 and the relevant portions are reproduced
below-
SECTION [70. Furnishing of returns. ((1)) Every
person liable to pay the service tax shall himself
assess the tax due on the services provided by him
and shall furnish to the Superintendent of Central
Excise, a return in such form and in such manner
and at such frequency land with such late fee not
exceeding two thousand rupees, for delayed
furnishing of return, as may be prescribed.
(2) The person or class of persons notified under
sub-section (2) of section 69, shall furnish to the
Superintendent of Central Excise, a return in such
form and in such manner and at such frequency as
may be prescribed.)
RULE [7C. Amount to be paid for delay in furnishing
the prescribed return.((1) Where the return
prescribed under rule 7 is furnished after the date
prescribed for submission of such return, the person
liable to furnish the said return shall pay to the credit
of the Central Government, for the period of delay of
-
(i) fifteen days from the date prescribed for submission of such return, an amount of five hundred rupees;
(ii) beyond fifteen days but not later than thirty days from the date prescribed for submission of such return, an amount of one thousand rupees; and
(iii) beyond thirty days from the date prescribed for submission of such return an amount of one thousand rupees plus one hundred rupees for every day from the thirty first day till the date of furnishing the said return:
Service Tax Appeal No.70225 of 2024 7 Provided that the total amount payable in terms of this rule, for delayed submission of return, shall not exceed the amount specified in section 70 of the Act:
From the above provisions, I find that in case of filing of ST-3 return delayed by the due date, the service provider is bound to pay a late fee at the prescribed rate which may extend up to Rs.2,000/- depending on delay. I find that the party had filed ST-3 return for the period April 2009 to September 2009 on 27.04.2010 i.e. beyond the due date. Therefore, I find that the party is liable to pay a late fee of Rs.2,000/- under section 70 of the Finance Act, 1994 read- with Rule 7C of the Service Tax Rules, 1994. Thus, I hold that the party is liable to pay a late fee of Rs.2,000/-"
4.3 Undisputedly, there is a delay in payment of service tax for the period from April, 2009 to January, 2010. Appellant has challenged the demand for interest made. It is settled proposition in law that interest represents the time value of the amount deposited and is to be paid along with amount due.
Further liability to interest can be contractual or a statutory liability. Undisputedly in the case under consideration I am concerned with liability to interest created by the statute i.e. statutory liability. Statute lays down in the case of payment of service after the due date, the interest for the period of delay in payment of the tax is required to be paid at the prescribed rate. Impugned order carefully examines these aspects and concludes that the interest is demandable.
4.4 Hon'ble Bombay High Court in the case of UNION OF INDIA through Controller of Stores, Central Railway Versus COMMISSIONER OF CUSTOMS (IMPORT-I) 2019 (370) ELT 243 (Bom.) following has been held:-
"6. No doubt, the order in Dev Ashish (supra) does rule that the penal interest provision in Section 11AB of Central Excise Act would apply only to those cases where clearances were effected after the date of insertion of Service Tax Appeal No.70225 of 2024 8 Section 11AB in the Act. But that is because of the peculiar nature of Section 11AB, as it then stood. Under Section 11AB, as it then stood, interest was required to be paid "from the first date of the month succeeding the month in which duty ought to have been paid under the Act", in the event of non-levy or non-payment or short-levy or short- payment of any duty of excise. All duties of excise are leviable and payable at the time of clearance or removal of the goods produced or manufactured. The question of non- levy or non-payment or short-levy or short-payment would thus arise at the time of such clearance or removal. The relevant date for claiming interest, thus, would be the date of clearance without payment of full duty, occasioning such non or short-levy or payment. The observations of our Court in that case that the provisions of Section 11AB, inserted with effect from 28th September, 1996, would apply only to those cases where clearances were effected after 28th September, 1996, have to be read in that context. In our case, we are concerned with interest payable under Section 28AA of the Customs Act, which is in pari materia with Section 11AA of the Central Excise Act and not Section 11AB of the Act. Section 28AA, as it stood at the relevant time, provided for the assessee‟s liability to pay interest if customs duty was not paid within three months from the date of determination of the duty. Interest was then leviable from the date immediately after the expiry of such period of three months. The relevant date, thus, was the date of determination of duty and expiry of three months thereafter. If and to the extent that date happened to be after the insertion of Section 28AA, the provision was certainly applicable to the case."
4.5 Hon'ble Bombay High Court in the case of M/s Swan Mills Ltd. 2015 (324) ELT 361 (Bom) has held as follows:-
"12. Section 11AA was brought on the statute book on 26th May, 1995. Prior to this provision, recovery of interest Service Tax Appeal No.70225 of 2024 9 and payment was governed by Notifications. In the circumstances, there is no substance in this writ petition. Merely because some legal provision is mentioned and that provision was not in force at the relevant time does not mean interest cannot be claimed or the recovery is invalid and illegal. Similarly, the liability to pay being admitted, the delay being admitted, it is not open to the petitioner to urge that there is any violation of the principles of natural justice. There was no lis pending between the parties. The sum demanded as duty was already crystallised. That was not paid, but the Revenue was forced to resort to coercive measures for recovery thereof is admitted. The list of dates and events would itself disclose as to how having lost the litigation right up to the Hon‟ble Supreme Court the bank guarantees could not be encashed for they were not kept alive. Similarly, the Revenue was forced to move a motion in contempt. Thereafter from 1997, there was detailed correspondence. The sum due towards taxes was demanded but in response to each of these letters, neither the payment was forthcoming nor the petitioner came forward to discharge the liability. The petitioner bought time and it was only after the detention order was issued that a good five years from the issuance of the said order dated 13th October, 1999, payment was made on 7th October, 2004. Thus, the Revenue could have earned the moneys in 1989 itself. That was not possible because of the writ petitions being filed in this Court by the petitioner. The petitioner was fully aware of the outcome of the litigation as it lost the battle in the Hon‟ble Supreme Court in the first round on legality and validity of the levy. Yet it commenced the second round and with an intention to delay the recovery. That was visible and apparent. Thereafter the Prothonotary & Senior Master of this Court could not encash the bank guarantees and time was lost because of another deliberate act of the petitioner from 1992 till 2004. In the circumstances, a very reasonable Service Tax Appeal No.70225 of 2024 10 demand has been raised and which is of payment of interest from the date on which Section 11AA came into force up to 7th October, 2004. That is not time-barred because of the events which have been admitted by the petitioner. Thus, from 1995 till 2004, there were several steps taken and culminating in issuance of a detention order dated 13th October, 1999. Thereafter, the petitioner came forward to pay the sum but after nearly five years. Hence it is not open to the petitioner to raise any technical pleas. Each one of them is, therefore, frivolous. The writ petition deserves to be dismissed.
13. Mr. Rao relies upon the following two decisions one of which is of this Court :
(1) Calcutta Jute Manufacturing Co. v. Commercial Tax Officer, 1997 (93) E.L.T. 657 (S.C.).
(2) Premier Limited v. Union of India, 2014 (309) E.L.T. 3 (Bom.).
14. Before we proceed further, we would like to observe that there is no dispute on facts. A perusal of the writ petition and the events disclosed therein together with the dates on which they took place discloses that there was nothing which was required to be adjudicated or decided. The petitioner engaged the Revenue in prolonged legal battle. Even after losing the battle in the Hon‟ble Supreme Court of India on legality and validity of the levy, the petitioner pursued its case. It filed two more writ petitions in this Court and in which as well, interim orders were sought. The interim orders were not to the satisfaction of the petitioner and, therefore, matters were taken to the Division Bench. The Division Bench found that there is no merit in the writ petition. The demand towards duty liability is already crystallized and determined. There is no substance in the contention of the petitioner that Service Tax Appeal No.70225 of 2024 11 procedure under Section 11A of the Central Excise Act is required to be followed. The learned single Judge‟s order to that effect was challenged by the petitioner before the Division Bench. The Revenue was aggrieved by the direction of the learned Judge not to encash the bank guarantees which were otherwise encashable after the petitioner suffered a loss in the Hon‟ble Supreme Court of India. It is in these circumstances that the rival contentions were noted and considered by the Division Bench and it found that none of the grounds raised in the petition by the petitioner herein in the second round deserves acceptance. The Division Bench, therefore, rightly held that the bank guarantees ought to be encashed with expedition. That order of the Division Bench dated 27th April, 1989, was also challenged in the Hon‟ble Supreme Court of India but the petitioner failed. Thus, legal proceedings and which were utterly frivolous and vexatious were pursued with vigour and impunity thereby depriving the revenue of its legitimate dues. Eventually, in matters of payment of taxes, interest of public is at stake. The public interest immensely suffers when recovery of Revenue is blocked and by assessees who admit their liability otherwise. Prolonged legal proceedings frustrate and defeat recovery and are intended in such cases to achieve that object and purpose. Therefore, when the bank guarantees were not kept alive as is clear from the communication of Bank of Baroda dated 24th July,1992 pages 48 to 50 and pages 51 to 52, then, we do not think that the petitioner can insist on compliance with any legal requirement much less of issuance of a show cause notice, personal hearing and a reasoned order thereafter demanding interest. There being no dispute on facts, there being no lis that we are of the view that the first contention of Mr. Patil must fail.
Service Tax Appeal No.70225 of 2024 12
15. Equally untenable is his second contention that recovery of interest in this case is not automatic. In that regard, Mr. Rao‟s contentions deserves acceptance.
16. In the case of Aditya Mass Communications (Pvt.) Ltd. v. Andhra Pradesh State Road Transport Corporation reported in AIR 2003 SC Pg. 3411, the Hon‟ble Supreme Court held as under :
"8. The facts narrated hereinabove clearly shows the respondent has retained the money belonging to the appellant without authority of law and has driven the appellant to series of litigations, therefore, this fact itself should have been sufficient to refuse the request of the respondent made before the High Court for reduction of rate of interest. The quantum of interest a Court may allow in a given case is governed by the facts of the case and not by any precedent law unless of course, limited by a statute. If a Court comes to the conclusion on a given set of facts, a party has been wrongly denied the use of its own money, it is the duty of the Court to see that the said party is appropriately compensated. In the instant case, we are of the opinion that the respondent has deprived the appellant of its rightful use of the money. Therefore, the interest awarded by the trial Court to say the least was most reasonable. We also notice that the High Court has not given any reason except referring to the judgments of this Court in the case of Sovintorg (India) Ltd. v. State Bank of India, New Delhi - (1999) 6 SCC 406 and Ghaziabad Development Authority v. Union of India & Anr. (2000) 6 SCC 113. As stated above, the facts of this case do not justify the application of the principles laid down by this Court in those judgments."
17. Further, the Hon‟ble Supreme Court refers to its prior decision in the case of Sovintorg (India) Limited v. State Bank of India, New Delhi, reported in AIR 1999 SC 2963 Service Tax Appeal No.70225 of 2024 13 wherein the Supreme Court has laid down this principle and which is salutary in nature. The Court of law must possess a power to compensate those who have been deprived of money legitimately due and payable to them. In that case and other cases following the same, the Supreme Court found that absence of a legal provision will not affect the demand for interest and rather it must be read as a power implicit and inherent in the power to render justice. In Sovintorg (supra), the Hon‟ble Supreme Court held as under :
" ..... There was no contract between the parties regarding payment of interest on delayed deposit or on account of delay on the part of the opposite party to render the services. Interest cannot be claimed under Section 34 of the Civil Procedure Code as its provisions have not been specifically made applicable to the proceedings under the Act. We, however, find that the general provision of the Section 34 being based upon justice, equity and good conscious (conscience) would authorise the Redressal Forums and Commissions to also grant interest appropriately under the circumstance of each case. Interest may also be awarded in lieu of compensation or damages in appropriate cases. The interest can also be awarded on equitable grounds as was held by this Court in Satinder Singh v. Umrao Singh, [(1961) 3 SCR 676 = AIR 1961 SC 908]. Referring to the province of the Interest Act of 1839, in relation to the compulsory acquisition of land where no specific provision is made for grant for awarding the interest, the Court held at p. 917 of AIR) :
"In this connection we may incidentally refer to Interest Act, 1839 (XXXII of 1839). Section 2 of this Act confers power on the Court to allow interest in cases specified therein, but the proviso to the said section makes it clear that interest shall be payable in all cases in which it is now payable by law. In other words, the operative provisions of Service Tax Appeal No.70225 of 2024 14 S. 1 of the said Act do not mean that where interest was otherwise payable by law Court‟s power to award such interest is taken away. The power to award such interest on equitable grounds or under any other provisions of the law is expressly saved by the proviso to S.1. This question was considered by the Privy Council in Bengal Nagpur Railway Co. Ltd. v. Ruttanji Ramji, [(1938) 65 Ind App 66 : AIR 1939 PC 67]. Referring to the proviso to S.1 of the Act the Privy Council observed "this proviso applies to cases in which the Court of equity exercises its jurisdiction to allow interest." We have already seen that the right to receive interest in lieu of possession of immovable property taken away either by private treaty or by compulsory acquisition is generally regarded by judicial decisions as an equitable right; and so, the proviso to S.1 of the Interest Act saves the said right. We must accordingly hold that the High Court was in error in rejecting the claimant‟s case for the payment of interest on compensation amount, and so we direct that the said amount should carry interest at 4% per annum from the date when respondent 2 took possession of the claimant‟s lands to the date on which it deposited or paid the amount of compensation to them."
To the same effect is the judgment in Laxmichand v. Indore Improvement Trust, Indore, AIR 1975 SC 1303. The State Commission as well as the National Commission were, therefore, justified in awarding the interest to the appellant but in the circumstances of the case we feel that grant of interest at the rate of 12% was inadequate as admittedly the appellant was deprived of the user of a sum of Rs. one lakh for over a period of seven years ...."
18. In regard to the Court‟s duty, the following judgment of the Hon‟ble Supreme Court in South Eastern Coalfields Ltd. v. State of M.P. & Ors., AIR 2003 SC Pg. 4482 contains pertinent observations. The same have far Service Tax Appeal No.70225 of 2024 15 reaching consequences in law. We are bound by the following observations :
"19. Interest is also payable in equity in certain circumstances. The rule in equity is that interest is payable even in the absence of any agreement or Custom to that effect though subject, of course, to a contrary agreement (see Chitty on Contracts, Addition 1999, Vol. II, Part 38- 248, at page 712). Interest in equity has been held to be payable on a market rate even though the deed contains no mention of interest. Applicability of the rule to award interest in equity is attracted on the existence of a state of circumstances being established which justify the exercise of such equitable jurisdiction and such circumstances can be many.
20. We may refer to the decision of this Court in Excutive Engineer, Dhenkanal Minor Irrigation Division, Orissa & Ors. v. Lrs & Ors. - (2001) 2 SCC 721, wherein the controversy relating to the power of an arbitrator (under the Arbitration Act, 1940) to award interest of pre- reference period has been settled at rest by the Constitution Bench. The majority speaking through Doraiswamy Raju, J. has opined that the basic proposition of law that a person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation by whatever name it may be called, viz., interest compensation or damages and this proposition is unmistakable and valid; the efficacy and binding nature of such law cannot be either diminished or whittled down. It was held that in the absence of anything in the arbitration agreement, excluding the jurisdiction of the arbitrator to award interest on the amount due under the contract and in the absence of any other prohibition, the arbitrator can award interest.
..............
Service Tax Appeal No.70225 of 2024 16
24. Unless otherwise ordered by the Court, the successful party at the end would be justified with all expediency in demanding compensation and being placed in the same situation in which it would have been if the interim order would not have been passed against it. The successful party can demand (a) the delivery of benefit earned by the opposite party under the interim order of the Court, or (b) to make restitution for what it has lost; and it is the duty of the Court to do so unless it feels that in the facts and on the circumstances of the case, the restitution would far from meeting the ends of justice, would rather defeat the same .....
26. That no one shall suffer by an act of the Court is not a rule confined to an erroneous act of the Court; the act of the Court embraces within its sweep all such acts as to which the Court may from an opinion in any legal proceedings that the Court would not have so acted had it been correctly apprised of the facts and the law. The factor attracting applicability of restitution is not the act of the Court being wrongful or a mistake or error committed by the Court; the test is whether on account of an act of the party persuading the Court to pass an order held at the end as not sustainable, has resulted in one party gaining an advantage which it would not have otherwise earned, or the other party has suffered an impoverishment which it would not have suffered but for the order of the Court and the act of such party. The quantum of restitution, depending on the facts and circumstances of a given case, may take into consideration not only what the party excluded would have made but also what the party under obligation has or might reasonable have made. There is nothing wrong in the parties demanding being placed in the same position in which they would have been had the Court not intervened by its interim order when at the end of the proceedings the Court pronounces its judicial verdict Service Tax Appeal No.70225 of 2024 17 which does not match with and countenance its own interim verdict. Whenever called upon to adjudicate, the Court would act in conjunction with what is the real and substantial justice. The injury, if any, caused by the act of the Court shall be undone and the gain which the party would have earned unless it was interdicted by the order of the Court would be resorted to or conferred on the party by suitably commanding the party liable to do so. Any opinion to the contrary would lead to unjust if not disastrous consequences. Litigation may turn into a fruitful industry. Though litigation is not gambling yet there is an element of chance in every litigation ......"
19. Recently in the case of M/s. Raymond Limited v. Union of India and Ors. Central Excise Appeal Nos. 101 to 104 of 2014, decided on 5th March, 2015, we applied this very principle to uphold the demand of interest."
4.6 Hon'ble Supreme Court in the case of M/s Navyug Engineering Co. Ltd. Vs Union of India 2024 (390) ELT 3 (SC) has held as follows:-
"10.1The text of Section 125(2) clearly provides that, where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods shall be „liable to any duty and charges payable with respect to such goods‟. The sub-section provides that the liability to any duty and charges, that are payable, shall be paid in addition to the fine. We have held that Section 28 would come into operation for assessing and determining the duty and other charges payable with respect to goods redeemed under Section 125(2). Once Section 28 applies for determination of duty obligation arising under Section 125(2), the interest on delayed payment of duty arises under Section 28AB. The said provision obligates payment of interest in addition to the duty. We thus answer the last Service Tax Appeal No.70225 of 2024 18 issue by holding that the interest liability under Section 28AB is also attracted."
4.7 In another case, Hon'ble Supreme Court in the case of M/s Steel Authority of India Ltd. 2019 (366) ELT 769 (SC) has held as follows:-
"47. Coming to Section 11AB, it came to be inserted by Act 33 of 1996. Thereafter, it was amended by Act 10 of 2000, Act 14 of 2001, Act 20 of 2002 and Act 49 of 2005. We have already extracted the relevant provisions of the said section. Section 11A must necessarily be read with Section 11AB. This is for the reason that interest under Section 11AB is premised upon the duty of excise not being levied or paid or short levied, short paid or erroneously refunded. Such duty is either determined under sub-section (2) of Section 11A or without such determination it being paid under Section 2B of Section 11A. In any of the circumstances, namely, non-levy, non- payment, short-levy and short-paid, any duty has been determined or paid as has been provided under Section 11A, necessarily the assessee becomes liable to pay interest from the first date of the month succeeding the month in which duty ought to have been paid.
48. The question which we are necessarily called upon to decide is when price is revised upward with retrospective effect and the excise duty on the same is paid immediately on a future date whether interest is payable under Section 11AB from the first day of the month succeeding the month in which the duty ought to have been paid under the Act. To keep the matter in focus, the exact question is which is the month in which the duty ought to have been paid.
49. Under the Rules, goods become exigible to duty on removal. Assessment is to be done by assessee itself by Service Tax Appeal No.70225 of 2024 19 way of self-assessment. In a case where duty is payable on the basis of the value, the assessee is to apply the rate of duty to the value and pay the duty on or before the sixth day of the month succeeding the month in which removal of the goods takes place. Undoubtedly, if the removal takes place in March, the payment is to be made by 31st of March.
50. We have also noticed what happens if there is provisional assessment. In the case of provisional assessment, the assessee entertains a doubt regarding the actual value or the rate of duty. He applies and he is permitted under the order to remove goods on a provisional assessment. The assessment is thereafter finalized. When the provisional assessment is finalized, the assessee becomes liable however to pay interest from the first date of the month succeeding the month for which the amount is determined. We have no doubt in our mind that under Rule 7(4), the expression "succeeding the month for which such amount" is determined refer to the month of removal of the goods. When the provisional assessment has such consequences, it would occasion an invidious discrimination to place an interpretation on Section 11AB by which those assesses who go in for provisional assessment under Rule 7 are called upon to pay interest upon finalization of the assessment with reference to the date of removal in a case where the value is fully determined as a result of escalation clause being worked resulting in an upward revision of prices and under Section 11AB payability arises with reference to the date of decision to grant escalation. In other words, the law will have to be interpreted in a manner that it is fair and equal to similarly situated group of assessees. Legislative intention, in this regard, also cannot be otherwise. Legislature has clearly in Section 11AB spelt out the time with reference to the Act and the Rules. Under Section Service Tax Appeal No.70225 of 2024 20 11AB in the case of short-levy or short payment inter alia, the expression "month in which the duty has become payable" under the Act and the rules must be understood as the month in which the duty is payable under the Rules made under the Act. Thus, if goods are removed in the month of January ordinarily payment must be made by the 6th of February. If the duty is not paid by the 6th of February, Section 11AB must be understood as mulcting the assessee with liability to pay interest from the first day of March in the example we have given. If the assessee went in for provisional assessment under Rule 7, it becomes liable from the 1st day of the month following the month for which the amount is determined.
51. The expression "the month in which the duty ought to have been paid" under this Act, when it is read alongwith Rule 8, which declares that the duty on the goods removed from the factory or warehouse during a month is to be paid on the 6th day of the following month would mean that the Legislature has understood the expression "the month in which the duty ought to have been paid" under the Act in the same sense as it is declared in Rule 8.
52. In this regard it is also pertinent to notice the finding in the order of the original authority that perusal of the Circular dated 1-7-2004 makes it unambiguously clear that the price was understood as provisional price. This belies quite clearly the case of the appellant that the price was final. Could the assessee in the light of the Circular even for a moment in the same breath contend that the assessee was unhesitatingly ready and able to determine the price and hence the value. We would think that it certainly presented a situation where the assessee should have resorted to Rule 7.
53. As we have already noted, SAIL has paid the differential duty of Rs. 142.78 crores even without waiting Service Tax Appeal No.70225 of 2024 21 for any notice under Section 11A(1). The assessee volunteered and made payment in October 2006. We find merit in the finding by the authority that this is a case where therefore the payment made by the assessee is to be treated as one falling under Section 11A(2)(b). This meant also that there was no need for determination of the duty within the meaning of Section 11A(2)(a) or issuance of notice under Section 11A.
54. It is important to notice that when we contrast Section 11A as it was introduced with effect from 15-11- 1980 with Section 11A after amendment by Section 97 of the Finance Act, 2000, we find that in the later avtar of Section 11A, the following words have been inserted : -
"Whether or not such non-levy or non-payment, short-levy or short-payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder."
No doubt, it had the effect of taking away the basis for the decision in the case of Collector of Central Excise, Baroda v. Cotspun Ltd, reported in (1999) 7 SCC 633, which took the view that a levy based on the approved classification list, is not short-levy. But its impact goes beyond the same. Power under Section 11A to recover the duty which has not been levied or not been paid or short-levied or short-paid will be available inter alia irrespective of, whether the aforesaid contingency was or was not the result of any approval, acceptance or assessment either relating to the rate of duty or the valuation under the Act and the Rules. Thus, even when there has been an assessment or acceptance in relation to the rate of duty or valuation, it does not stand in the way of invoking power under Section 11A.
Service Tax Appeal No.70225 of 2024 22
55. Rule 12 declares that every assessee is to file monthly returns. There is no provision in the rule which contemplates an assessment as such based on the return by the authorities. Assessment is self-assessment by the assessee under Rule (6). No doubt, in the case covered by Rule 7 there is a provisional assessment followed by a final assessment. The main ingredients for self-assessment would appear to be (1) the rate of duty (2) valuation (3) quantity of removal.
56. Are cases of non-levy, non-payment, short-levy and short-payment mutually exclusive? In other words, can it be said that in a case of non-payment, it would not be a case of non-levy? Do they overlap? If there is non-levy, will there be short-levy at the same time. Finally, in a case of short-levy, can there also be short payment?
57. What is levy? We have already noticed that in the decision of this Court in N.B. Sanjana (supra), this Court rejected the argument of the Revenue that levy in Rule 10 means collection of some amount. The Court went on to hold that levy has not been used in the Act or the rules as meaning actual collection.
58. In a case where goods are removed clandestinely, there would be no levy. Equally, there will be non- payment. Thus, a case of non-levy can overlap with non- payment. No doubt, there can be cases where despite full levy there can be no payment, may be by mistake or otherwise. Equally thus, if there is no non-levy, there can be partial payment. That would make it a case of short payment as the payment does not match the amount of duty levied as per the self-assessment carried out by the assessee. A short-levy ordinarily would be a case where out of the ingredients of assessment, namely, (1) rate of duty, (2) valuation and (3) quantity removed, the components all or any are incorrectly applied. As an Service Tax Appeal No.70225 of 2024 23 instance if the full rate of duty applicable is not applied though the valuation and the quantity is correctly arrived at, it may fall under short-levy. In one sense it could be said that there is short-payment also, as if payment could be understood as the amount which ought to have been paid but it has not been paid, it may be a case of short- payment. But it may be more appropriate to put it under short-levy where the deficit in payment is essentially in terms of a short-levy.
59. We are here concerned in these cases with one of the ingredients of assessment, namely, valuation. There is no dispute regarding the quantity removed. There is no issue relating to rate of duty. The dispute is relating to the correct value. To appreciate it better, let us take an example of an assessee who deliberately undervalues the goods which he removed. This results in assessee arriving at an amount which would not be the correct amount. He pays this incorrectly assessed amount. Would it be a case of short-levy or short payment? If short-levy is to be understood as confined to cases where the assessment is not the full assessment, taking into account the parameters involved correctly, namely, rate of duty, valuation and quantity it could be classified as a case of short-levy as one of the components of proper assessment namely, valuation has been incorrectly arrived at. The payment in such a case is made in terms of the incorrectly assessed figure. The payment matches the assessment. In fact, it is worthwhile to recall that under Rule 10 of 1944 Rules which we have adverted to, the expression "short- payment" is not used. Instead the words duty has not been paid in full, has been used. No doubt, in a case where in law though the amount which is paid is in harmony with the amount which is assessed, it is not the amount which ought to have been paid by the assessee. The absence of full payment of duty or short payment has indeed also in Service Tax Appeal No.70225 of 2024 24 one sense taken place. In a case where there is an escalation clause goods are cleared on a provisional price. Consequently, the value is provisional. There is a subsequent escalation with retrospective effect. It will affect the valuation which was employed in the self- assessment by the assessee which would necessarily be provisional. Enhancement of the value will date back to the dates of removal in view of the retrospective operation. Admittedly the liability for payment of differential duty has arisen. Upon the true value, in a case of retrospective escalation of price though later agreed being received and consequential differential duty being admittedly payable, it would result in Section 11A read with Section 11AB applying.
60. It is true that the statutory authority has found it to be a case of short payment. In the notice issued claiming interest it is stated there is short-levy (see page 89 Vol. II SLP paper book). Proceeding on the basis that it is a case of short-levy, Section 11A read with Section 11AB is attracted and the interest clock ticks from the date as we have found namely as provided in Rule 8 read with Section 11AB. If the concept of short payment is stretched to include all amounts which ought to have been paid, it may also be treated as a case of short payment though juridically it may be true that it may strictly fall under short-levy.
61. While it may be true that interest cannot be demanded by way of damages or compensation and it is also further true that unless there is a substantive provision providing for payment of interest in a fiscal statute, interest cannot be demanded, we would think in the context of the Act and the Rules in question, under Section 11AB, particularly, when there is no dispute relating to liability to pay the differential duty and we notice that absence of dispute is a fair acknowledgement Service Tax Appeal No.70225 of 2024 25 of the fact that the facts of the present cases are unlike the situation in MRF decision where the price was fixed at the time of removal, interest is payable as provided in Section 11AB and from the point of time indicated therein. But in these cases, the price was variable under the escalation clause which was very much within the knowledge of the assessee and the demand for interest is sustainable."
4.8 In view of the above, I do not find any merits in the submissions made by the appellant with regards to the recovery of late fee under Section 70 also. Such liability for compliance with the levy and procedural requirements cannot be waived. It is settled position in law as held by Hon'ble Supreme Court in the case of M/s Gujarat Travancore Agency 1989 (42) ELT 350 (SC) by holding as follows:-
"4. Learned Counsel for the assessee has addressed an exhaustive argument before us on the question whether a penalty imposed under Section 271(1)(a) of the Act involves the element of mens rea and in support of his submission that it does he has placed before us several cases decided by this Court and the High Courts in order to demonstrate that the proceedings by way of penalty under Section 271(1)(a) of the Act are quasi criminal in nature and that, therefore, the element of mens rea is a mandatory requirement before a penalty can be imposed under Section 271(1)(a). We are relieved of the necessity of referring to all those decisions. Indeed, many of them were considered by the High Court and are referred to in the judgment under appeal. It is sufficient for us to refer to Section 271(1)(a), which provides that a penalty may be imposed if the Income Tax Officer is satisfied that any person has without reasonable cause failed to furnish the return of total income, and to Section 276C which provides that if a person wilfully fails to furnish in due time the return of income required under Section 139(1), he shall be punishable with rigorous imprisonment for a term which may extend to one Service Tax Appeal No.70225 of 2024 26 year or with fine. It is clear that in the former case what it intended is a civil obligation while in the latter what is imposed is a criminal sentence. There can be no dispute that having regard to the provisions of Section 276C, which speaks of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mens rea is established. In most cases of criminal liability, the intention of the Legislature is that the penalty should serve as a deterrent. The creation of an offence by Statute proceeds on the assumption that society suffers injury by and the act or omission of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence. In the case of a proceeding under Section 271(1)(a), however, it seems that the intention of the legislature is to emphasise the fact of loss of Revenue and to provide a remedy for such loss, although no doubt an element of coercion is present in the penalty. In this connection the terms in which the penalty falls to be measured is significant. Unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. In our opinion, there is nothing in Section 271(1)(a) which requires that mens rea must be proved before penalty can be levied under that provision. We are supported by the statement in Corpus Juris Secundum Volume 85, page 580, Paragraph 1023 :
"A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws."
4.9 During the course of arguments counsel for appellant had referred to decision of Ahmedabad in appellant own case. I find that the issue considered in that decision was the issue for which demand of Rs 1,46,36,533/- [Rupees One Crore Forty Six Lakh Thirty Six Thousand Five Hundred Thirty Three only] has been Service Tax Appeal No.70225 of 2024 27 dropped by the adjudicating authority. Revenue has not filed any cross objections or appeal challenging the dropping of this demand. Hence reliance placed by the counsel on this decision is totally uncalled for.
4.10 Thus, I do not find any merits in the appeal filed by the appellant.
5.1 Appeal is dismissed.
(Order pronounced in open court on-13 August, 2025) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp