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Custom, Excise & Service Tax Tribunal

Indian Oil Corporation Ltd. vs Haldia on 28 April, 2025

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
             EASTERN ZONAL BENCH : KOLKATA

                          REGIONAL BENCH - COURT NO. 1

                   Service Tax Appeal No. 75470 of 2024
 (Arising out of Order-in-Appeal No. 29/HAL/ST/2021-22 dated 21.06.2021 passed
 by the Commissioner of CGST & Central Excise (Appeals-II), Kolkata, Bamboo Villa,
 3rd Floor, 169, A. J. C. Bose Road, Kolkata-700014)


 M/s. Indian Oil Corporation Limited,                                  : Appellant
 Refinery Division, Haldia Refinery,
 Haldia-721606

                                         VERSUS

 Commissioner of CGST & Central Excise                               : Respondent

(Appels-II), Kolkata 169, 3rd Floor Bamboo Villa, AJC Bose Road, Kolkata-700014 APPEARANCE:

MS. Shreya Mundhra for the Appellant Shri P. K. Ghosh, Authorized Representative for the Respondent CORAM:

HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL) FINAL ORDER NO.76183/2025 DATE OF HEARING / DECISION: 28.04.2025 Order: [PER SHRI K. ANPAZHAKAN] The present appeal has been filed against the Order-in-Appeal 29/HAL/St/2021-22 dated 21.06.2021, passed by the Commissioner of CGST & Central Excise (Appeals-II), Kolkata, wherein the Ld. Commissioner has upheld the demands confirmed in the Order-in-Original dated 29.03.2019.

2. M/s. Indian Oil Corporation Ltd. (Refinery Division), Halide Refinery, (herein after referred as the appellant) is engaged in manufacturing, storing, and dispatching finished marketable petroleum Page 2 of 9 Appeal No.: ST/75470/2024-DB products of different tariff heads. These products mainly include different grades of Fuel Oils, Lubricating Oils, and Bitumen.

2.1. Based on alleged intelligence, a Show Cause Notice (SCN) bearing C.No.V.ST(15)9/CE/Hal/Adjn/2011/5479 dated 25.03.2011 was issued to the Appellant alleging that they had received "intellectual property service" as per Section 65(55b) of Chapter V of the Finance Act, 1994 from service providers who had established businesses in countries other than India during the period April 2006 to March 2007. The SCN alleged that the Appellant had paid Rs. 1,23,02,741/- in foreign currency as Royalty to their foreign service providers viz. AXENS (vendor code No. 10302335) and TECHNIP (vendor code No. 10303425) against P.O. No. 17506037 and 17506948 respectively during 2006-07 without paying service tax on the value of such services received. The SCN further alleged that the Appellant had failed to obtain registration for the "intellectual property service"

category and had not furnished any returns to the jurisdictional Service tax authority, thus suppressing material facts with intent to evade payment of Service tax. Accordingly, the SCN proposed to recover Service Tax of Rs. 14,76,329/- and Education Cess of Rs. 29,527/- totaling Rs. 15,05,856/- under Section 73(1) of the Finance Act, 1994 along with interest under Section 75 and penalties under Section 76, 77, and 78 of the Finance Act, 1994.

2.2. The said notice was adjudicated by the Additional Commissioner confirming the demand of service tax of Rs. 15,05,856/- along with interest.

Appeal No.: ST/75470/2024-DB On appeal, the Ld. Commissioner (Appeals) has upheld the demands confirmed in the Order-in- Appeal. Aggrieved against the impugned order, the appellant has filed appeal. Before this Tribunal. This Tribunal, vide its order dated 17.02.2014 remanded the matter back to the Adjudicating Authority to decide the issue afresh after taking into consideration the CA certificate dated 23.01.2014 and any other evidence in support of the facts.

2.3. In the de-novo proceedings, the Additional Commissioner passed the Order-in-Original No. 10/ADC/Denovo/CGST/Haldia/Adjn/2019 dated 29.03.2019 confirming the demand on the ground that IOCL, Haldia had received the taxable service from the foreign service provider and hence was liable to pay service tax, even though IOCL, New Delhi Office had paid the service tax. On appeal, the Ld. Commissioner (Appeals-II), Kolkata, rejected the appeal vide Order-in-Appeal No. 29/HAL/ST/2021-22 dated 21.06.2021 . Aggrieved against this Order-in- Appeal (impugned order), the appellant has filed this appeal.

3. The appellant submits that the service tax in question has already been paid by IOCL, Refineries Division, New Delhi vide Cyber Receipt No. 069115009050207000 dated 05/02/2007 for Rs. 42,95,494/-. This payment included service tax of Rs. 8,78,683/- on payment of Euro 2,08,343/- to M/s Axens and Euro 6,000/- to M/s Technip as mentioned in the SCDN No. V.ST(15)9/CE/Hal/Adjn/2011/5479 dated 25/03/2011. This payment of service tax by IOCL, New Delhi is undisputed and has been accepted by the department, as evident from para 11.4 of the Page 4 of 9 Appeal No.: ST/75470/2024-DB Order-in-Original where the Ld. Additional Commissioner states: "New Delhi office have paid Service Tax to the tune of Rs.42,95,494/- vide Cyber Receipts No.069115009050207000 dated 5.2.2007."

The Range Inspector of Central Excise, Haldia has verified and certified that the cyber receipt dated 05/02/2007 includes the service tax payment for the foreign remittances in question for the Haldia unit. This certificate dated 16/11/11 was submitted before the adjudicating authority. However, the Adjudicating as well as Appellate Authority have failed to appreciate the same. The Chartered Accountant has also issued a certificate dated 23.01.2014 clarifying that the services have been provided to Refinery Head Quarters and payment for the same has been made from RHQ. This certificate was specifically directed by the CESTAT to be examined in its remand order dated 17.02.2014. Despite clear and unambiguous evidence of service tax payment by IOCL, New Delhi, including the Range Inspector's certification which is an official departmental document, both the Additional Commissioner and the Commissioner (Appeals) have disregarded this evidence on the mere technicality that it was not specified that the payment was specifically for Haldia Refinery. The appellant submits that both the Certificates duly provide that the payments were made towards Haldia refinery, and specify the exact amount of tax confirmed in the impugned order. Accordingly, the appellant submits that the impugned order is liable to set aside.

3.1. The appellant relied on the following decisions in support of their contentions;

Appeal No.: ST/75470/2024-DB o Devang Paper Mills Ltd. v. UOI 2016 (1) TMI 389 - GUJARAT HIGH COURT o Falah Steel v. UOI 2016 (6) TMI 924 - GUJARAT HIGH COURT o Welspun Corp v. Commissioner 2023 (2) TMI 780 - CESTAT AHMEDABAD o Commissioner v. Tata Metaliks 2023 (6) TMI 10 - CESTAT KOLKATA o Sahara India TV Network Versus C.C.E. & S.T., Noida [2015 (10) TMI 2037 - CESTAT NEW DELHI], o Neyvili Lignite Corporation Ltd. v. Commissioner 2018 (1) TMI 1055 - CESTAT CHENNAI 3.2. The appellant has also contested the demand confirmed on the ground of limitation. The appellant submits that there is no suppression of facts or intention to evade payment of service tax in the present case, as the service tax has already been paid by RHQ, New Delhi. Therefore, extended period of limitation under Section 73(1) of the Finance Act, 1994 is not invocable in this case.

4. The Ld. A.R. reiterated the findings in the impugned order.

Appeal No.: ST/75470/2024-DB

5. Heard both sides and perused the appeal documents.

6. We observe that the service tax in question has already been paid by IOCL, Refineries Division, New Delhi vide Cyber Receipt No. 069115009050207000 dated 05/02/2007 for Rs. 42,95,494/-. This payment included service tax of Rs. 8,78,683/- on payment of Euro 2,08,343/- to M/s Axens and Euro 6,000/- to M/s Technip as mentioned in the SCDN No. V. ST (15)9/CE/Hal/Adjn/2011/5479 dated 25/03/2011. This payment of service tax by IOCL, New Delhi is undisputed and has been accepted by the department.

6.1. We observe that Indian Oil Corporation Limited is a single legal entity, and Haldia Refinery and Refineries Headquarters (RHQ) in New Delhi are merely different units of the same legal entity. The business model of IOCL, clearly shows that RHQ, New Delhi is involved in centralized procurement of services for various refineries including Haldia Refinery. The invoices were raised by the foreign vendors in the name of IOCL, Refineries Division, New Delhi office and payments were also made by RHQ, New Delhi.

6.2. We observe that the appellant have deposited the service tax in the account of Delhi Commissionerate instead of Haldia Commissionerate. This remittance of service tax in a difference service tax registration of the same assessee is a matter of internal adjustment and the appellant cannot be saddled with the demand of service tax again. Similarly, the issue relating to accounting code cannot be a reason to demand Service tax again. The service tax paid by the Hqrs can be adjusted by Page 7 of 9 Appeal No.: ST/75470/2024-DB the authorities against the service tax liability, if any, of the appellant company at Haldia. The appellant's Delhi unit is not a separate entity as the same is part of a single entity i.e. Indian Oil Corporation Ltd. Therefore, the payment made by head office under different registration number cannot be demanded from the Appellant's Haldia Unit and if at all there is discrepancy of different registration of head office the department could have adjusted service tax paid by the head office against the service tax due of appellant's Haldia unit. Similarly, the issue relating to payment under accounting code 'Scientific and Technical Consultancy Service' can be adjusted against the accounting code 'Intellectual Property Service'.

6.3. As per Section 66A of the Finance Act, 1994, read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, the service recipient is liable to pay service tax under reverse charge mechanism. However, when the service tax has already been paid by one unit of the same legal entity, demanding it again from another unit amounts to double taxation on the same transaction, which is impermissible in law. We observe that the aforesaid issue stands covered under various judgments as follows:

o Devang Paper Mills Ltd. v. UOI 2016 (1) TMI 389 - GUJARAT HIGH COURT o Falah Steel v. UOI 2016 (6) TMI 924 - GUJARAT HIGH COURT o Welspun Corp v. Commissioner 2023 (2) TMI 780 - CESTAT AHMEDABAD Page 8 of 9 Appeal No.: ST/75470/2024-DB o Commissioner v. Tata Metaliks 2023 (6) TMI 10 - CESTAT KOLKATA o Sahara India TV Network Versus C.C.E. & S.T., Noida [2015 (10) TMI 2037 - CESTAT NEW DELHI], o Neyvili Lignite Corporation Ltd. v.

Commissioner 2018 (1) TMI 1055

- CESTAT CHENNAI 6.4. From the above judgments, we observe that it is settled that merely because the service tax paid under different registration but by the same company, cannot tantamount to non- payment of service tax. The law does not permit the taxation authority to recover the tax again where the tax on the same taxable event has already been paid, albeit under a different head or accounting code. Hence, the demand of service tax which was already paid cannot be made twice. Accordingly, we hold that the demand of service tax confirmed in the impugned order is not sustainable and hence, we set aside the same.

6.5. The appellant has also contested the demand confirmed on the ground of limitation. We observe that there is no suppression of facts or intention to evade payment of service tax in the present case, as the service tax has already been paid by RHQ, New Delhi. Therefore, we hold that the extended period of limitation under Section 73(1) of the Finance Act, 1994 is not invocable in this case. Accordingly, we hold that the demand confirmed in the impugned order is not sustainable on the ground of limitation also.

6.6. Since the demand of service tax is not sustainable, the question of demanding interest Page 9 of 9 Appeal No.: ST/75470/2024-DB under Section 75 and imposing penalties under Section 76, 77, and 78 of the Finance Act, 1994 does not arise and accordingly, the same imposed in the impugned order are set aside..

7. In view of the above discussions and findings, we set aside the impugned order and allow the appeal filed by the appellant with consequential, relief, if any, as per law.

(Operative part of Order was pronounced in Open court) (ASHOK JINDAL) MEMBER (JUDICIAL) (K. ANPAZHAKAN) MEMBER (TECHNICAL) rkp