Custom, Excise & Service Tax Tribunal
Ms Mittal Gupta And Associates vs Meerut-I on 14 October, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.II
Excise Appeal No.70421 of 2025
(Arising out of Order-in-Appeal No.MRT/EXCUS/000/APPL-MRT/181/2024-25
dated 22/10/2024 passed by Commissioner (Appeals) Central Goods &
Services Tax, Ghaziabad)
M/s Mittal Gupta & Associates, .....Appellant
(4, Meera Enclave, Garh Road, Meerut)
VERSUS
Commissioner of Central Excise &
Service Tax, Meerut ....Respondent
(Commissionerate, Meerut) APPEARANCE:
Shri Satyendra Mittal, Advocate for the Appellant Shri Santosh Kumar, Authorised Representative for the Respondent CORAM: HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO.70710/2025 DATE OF HEARING : 09 October, 2025 DATE OF PRONOUNCEMENT : 14 October, 2025 SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Appeal No.MRT/EXCUS/000/APPL-MRT/181/2024-25 dated 22/10/2024 passed by Commissioner (Appeals) Central Goods & Services Tax, Ghaziabad. By the impugned order following has been held:-
"ORDER
8. Appeal No. 13-ST/APPL-MRT/MRT/2024-25 dated 16.08.2024 filed by the appellant is disposed of in the under-mentioned terms and the impugned Order-in- Original No. 04/DC/Division-II/MRT/2024 dated 14.06.2024 is accordingly modified to the extent as under:
Excise Appeal No.70421 of 2025 2 8.1 I confirm the demand of Service Tax Rs 2,34,233/-
(Rupees Two Lakh Thirty-Four Thousand Two Hundred Thirty-Three only) out of Rs. 2.67, 164/-, including all Cessess, payable on taxable service income for the year 2016-17 and order to recover the same from the appellants under the proviso to Section 73(1) of the Finance Act, 1994 read with Section 142(8) and Section 174(2) of the CGST Act, 2017 8.2 I drop the demand of Service Tax of Rs. 32,931/- out of Rs. 2,67,164/-
8.3 I confirm the demand of interest on the amount of Service Tax of Rs.32,931/-from the due date of payment of tax till the date of actual payment and I also confirm the demand of interest on the amount of Service Tax of Rs. 2,34,233/-under Section 75 of the Finance Act, 1994 read with Section 142(8) and Section 174(2) of the CGST Act, 2017.
8:4 I impose a penalty of Rs. 2.34.233/- (Rupees Two Lakh Thirty-Four Thousand Two Hundred Thirty-Three only) upon the appellants in terms of Section 78 of the Finance Act, 1994."
2.1 The appellant was registered vide Registration No.AAWFM5435DSD001 with the Service Tax Department for providing taxable services under Section 65B (44) read with Section 66B of the Finance Act, 1994.
2.2 On the basis of the information received from the Income Tax Department it appeared that the appellant had received amounts towards providing of declared services some of them were not reflected in ST-3 return for the financial year 2016-17. 2.3 On receipt of the above information, revenue authorities were called upon to the appellant vide letter dated 12.04.2021 followed by reminder dated 16.06.2021. However, appellant was failed to provide the requisite information and the service tax liability was determined on the basis of information received from the Income Tax Authorities as detailed in table below:-
Total Sale of Total Gross TABLE No. Total Differential Rate of Service Tax Excise Appeal No.70421 of 2025 3 services Value: Amount paid/credited Value on which Service (including (Value as per provided in under 194C, 194H, Service Tax not Tax Cess) short ITR) STR 1941, 1943 (TDS) paid paid/not paid 1 2 3 4 5 6 50,00,000/- 19,98,908/- 24,03,327/- 30,01,092/- 15% 4,50,164/-
2.4 Show cause notice dated 21.10.2021 was issued asking them to show cause as to why-
"(i) Service Tax amounting to Rs.4,50,164/- (Rupees Four One Lac Fifty Seven Thousand One Hundred and Sixty Four only) including all Cesses, payable on taxable service income received for the year 2016-17 should not be demanded and recovered from them under proviso to Section 73(1) of the Finance Act, 1994 read with Section 174 of the CGST Act,2017.
(ii) Interest on the Service Tax demanded should not be recovered from them under Section 75 of the Finance Act, 1994 read with Section 174 of CGST Act, 2017,
(iii) Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994 read with Section 174 of CGST Act, 2017.
(iv) Penalty should not be imposed upon them, under Section 77(2) of the Finance Act, 1994, as they failed to furnish information called by the department thereby violating Rule 7 of Service Tax Rules, 1994."
2.5 The said show cause notice was adjudicated as per the Order-in-Original dated 14.06.2024 by holding as follows:-
"ORDER
(a) I confirm the demand of Service Tax Rs.2,67,164/-
(Rupees Two Lakh Sixty Seven Thousand One Hundred Sixty Four only) including all Cesses, payable on taxable service income received for the year 2016-17 and order to recover the same from the party under proviso to Section 73(1) of the Finance Act, 1994 read with Section 142(8) and Section 174(2) of CGST Act, 2017.
(b) I confirm the demand of interest, payable on the demand mentioned in clause (a) from the party, in terms Excise Appeal No.70421 of 2025 4 of Section 75 of the Finance Act. 1994 read with Section 142(8) and Section 174(2) of CGST Act, 2017.
(c) I impose a penalty of Rs.2,67,164/- (Rupees Two Lakh Sixty Seven Thousand One Hundred Sixty Four only) upon party in terms of Section 78 of the Finance Act, 1994." 2.6 Aggrieved appellant have filed appeal before Commissioner (Appeals) which has been disposed of as per the impugned order.
2.7 Aggrieved appellant have filed this appeal. 3.1 I have heard Shri Satyendra Mittal learned Counsel appearing for the appellant and Shri Santosh Kumar learned 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.
4.2 The impugned order records as follows:-
"7.5 Now coming to the first issue, I find that the appellants have submitted two CA certificates, both dated 14.08.2024, and as per first certificate the appellants have not received Rs. 17,81,092/- (out of total turnover Rs. 50,00,000/-] during the financial year 2016-17 and as per the second CA certificate the appellants have received professional fees of Rs. 2,19,540/- out of the total professional fees Rs. 17,81,092/- (which has not been received during the financial year 2016-17) during the 1st quarter of financial year 2017-18 and applicable Service Tax has been deposited on the same. Since the appellants raised the bills/invoices and charged Service Tax thereon, the Service Tax burden was passed on and simultaneously the service receiver would have availed CENVAT credit on the basis of the said bills/invoices. Further, I find that proviso (i) of Rule 3 of the Determination of Point of Taxation Rules, 2011 stipulates that in case of continuous supply of service where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the Excise Appeal No.70421 of 2025 5 receiver of service to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service. In the above context, the appellants have not submitted any evidences to prove that the service events are not completed. 7.6 I observe that on the basis of CA certificate submitted by the appellants that they have deposited due Service Tax on the professional fees of Rs. 2,19,540/-out of total professional fees Rs. 17,81,092/- and the remaining amount of professional fee of Rs. 15,61,552/- pertains to financial year 2016-17 not received by the appellant and the appellant have claimed that they followed the guidelines in Circular No. 154/5/2012-ST dated 28th March, 2012, which allows them with turnover up to Rs. 50 Lakhs to defer Service Tax payment until the receipt of payment and also claimed that the turnover of appellant's firm for financial year was Rs. 50 Lakhs.
7.7 In this regard, the relevant portion of above- mentioned circular is reproduced as under: The provisions have been amended both in the Point of Taxation Rules, 2011 and the Service Tax Rules, 1994 such that from 1st April, 2012 the payment of tax shall be allowed to be deferred till the receipt of payment up to a value of Rs 50 Lakhs of taxable services. The facility has been granted to all individuals and partnership firms, irrespective of the description of service, whose turnover of taxable services is fifty lakh rupees or less in the previous financial year. 7.8 Further, I also find that the third proviso to sub-rule (1) of Rule 6 of the Service Tax Rules, 1994 stipulates that "in case of such individuals, partnership firms and one person companies whose aggregate value of taxable services provided from one or more premises is fifty lakh rupees or less in the previous financial year, the service provider shall have the option to pay tax on taxable services provided or [agreed] to be provided by him up to Excise Appeal No.70421 of 2025 6 a total of rupees fifty lakhs in the current financial year, by the dates specified in this sub-rule with respect to the month or quarter, as the case may be, in which payment is received."
7.9 I find that the appellants have not submitted any documents evidencing that their turnover during the preceding financial year, i.e. 2015-16 was Rs. 50 Lakhs or less. Therefore, I find that benefit to pay tax on receipt basis is not admissible to the appellants. I set aside the demand of Service Tax amounting to Rs. 32,931/- on the taxable value Rs. 2,19,540/- and confirm the demand of Service Tax amounting to Rs. 2,34,233/- on taxable value Rs 15,61,552/-
7.10 Now, I take up the issue as to whether the appellants are liable to pay interest on Service Tax under Section 75 of the Finance Act, 1994 which has been confirmed in the impugned order. I observe that Section 75, supra provides that "every person, liable to pay the tax in accordance with the provisions of section 68 or rules made there under, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed shall pay interest at appropriate rate for the period by which such crediting of the tax or any part thereof is delayed." Thus, there can be no doubt that interest is attracted whenever the tax has not been paid within time. I therefore find that the appelants are liable to pay interest on the amount of Service Tax Rs. 32.931/- from the due date up to date of payment and also pay Interest on amount of Service Tax Rs 2.34,233/- under Section 75 of the Finance Act, 1994 7.11 Now, I take up the issue as to whether extended period under proviso to Section 73(1) of the Finance Act, 1994 is invokable in this case and the appellants are liable for penal action under Section 78, ibid. I find that the appellants had wilfully mis-declared and suppressed the value with intention to evade payment of Service Tax. The Excise Appeal No.70421 of 2025 7 appellants were liable to pay Service Tax in terms of the above-mentioned statutory provisions and by not paying such Service Tax on the due dates, they have contravened these provisions of the Act and the Rules made thereunder, as discussed above, with intent to evade payment of Service Tax. The appellants suppressed material facts regarding their liability to pay such Service Tax. This came to notice when the respondent-department examined the Income Tax Retums and other records of the appellants. Thus, I find that the charge of suppression of material facts with intention to evade Service Tax had been conclusively established herein above. Had the respondent-department not examined the records, the said taxable value would have been escaped assessment, resulting in non-payment of Service Tax. The appellants were aware of the facts regarding payment of Service Tax on all kind of receipts against taxable service including advance payment but did not disclose the same before the respondent-department. The suppression with an intent to evade payment, on the part of the appellants, is proved beyond doubt and the proviso to Section 73(1) of the Finance Act, 1994 has rightly been invoked in the impugned order. Therefore, I find that by their such act of omission, they have rendered themselves liable for penalty under Section 78 of the Finance Act, 1994." 4.3 It is contention of the appellant that though they do not dispute taxable services and have also raised invoices towards provisions of the said services. They have not paid service tax in respect of these services for the basic reason that in respect of numbers of invoices they have not received payments. The details of such payments are in table below:-
Sr. No. Party Name Amount
1 KDP Buildwell Pvt. Ltd 474352
2 Sheen India Pvt. Ltd. 600000
3 Sarveshwar Creation Pvt. Ltd. 360000
4 Uttarkhand Environment Protection & Pollution Control Board 127200
5 SRB International Private Ltd 20000
6 Director General of Health Services 36250
7 BRM College, Munger 40000
8 Laboni Collection 12000
9 Laboni Collection 24000
Excise Appeal No.70421 of 2025
8
10 Tricolor India Sch. Pvt. Ltd. 17500
11 Department of Electronics & Information Technology 48790
12 Aadhya Electronics 10500
13 Maharaja Rexine 10500
Total 1781092
Sr. Party Name Amount Reason for non- Remarks
No. payment
1 KDP Buildwell Pvt. Ltd. 474352 Dispute with the Legal notice enclosed
party
2 Sheen India Pvt. Ltd. 600000 Insolvency Copy of court order enclosed
3 Sarveshwar Creation 360000 Insolvency Copy of debt recovery
Pvt. Ltd. Tribunal order enclosed
4. Uttarkhand 127200 No response from E-mail Correspondences
Environment the party with party enclosed
Protection & Pollution
Control Board
1561552
4.4 Appellants submitted that the Board has issued a Circular
F.No.334/1/2012-TRU dated 28 March, 2012 which provided that service tax could have been paid only on receipt of payment against the invoices issued. In view of the said circular they have entertained a bonafide belief that the service tax to be paid only after realization of the invoices, as they entertained this bonafide belief, demand made by invoking the extended period of limitation is not tenable.
4.5 I observe that appellant have out of the received payment for various services, the fact which has not disputed by the revenue authorities either in the proceedings before the lower authorities this fact is also evident from the comparison of the figures in the ITR and 26AS return referred above in para-2.3. 26AS reflect the same amount of Rs.24,03,327/- while the ITR reflects the amount of Rs.50 lakhs, the difference is obvious. Apart from this amount which appellant have not disputed that apart from this amount of Rs.17,81,092/-, appellant has deposed the service tax in respect of the undisputed amounts. 4.6 I do not find any merits in the submissions made by the appellant to the fact that the circular dated 28th March, 2012 was provided for payment of service tax only on receipts of payment against the invoices raised. The text of the circular is reproduced below:-
"1. Notification No.4/2012-Service Tax dated the 17th March 2012 has amended the Point of Taxation Rules 2011 Excise Appeal No.70421 of 2025 9 we.f. 1st April 2012, inter-alia, amending Rule 7 which applied to individuals or proprietary firms or partnership firms providing taxable services referred to in sub-clauses
(g), (p), (4), (8), (1), (u), (za) and (zzzzm) of clause (105) of section 65 of the Finance Act. 1994. Rule 7 determined the point of taxation in such cases as the date of receipt of payment. The provisions have been amended both in the Point of Taxation Rules 2011 and the Service Tax Rules 1994 such that from 1st April 2012 the payment of tax shall be allowed to be deferred till the receipt of payment upto a value of Rs 50 lakhs of taxable services.
The facility has been granted to all individuals and partnership firms, irrespective of the description of service, whose turnover of taxable services is fifty lakh rupees or less in the previous financial year.
2. Representations have been received, in respect of the specified eight services, requesting clarification on determination of point of taxation in respect of invoices issued on or before 31 March 2012 where the payment has not been received before 1 April 2012.
3. The issue has been examined. For Invoices issued on or before 31 March 2012, the point of taxation shall continue to be governed by the Rule 7 as it stands till the said date. Thus in respect of invoices issued on or before 31 March 2012 the point of taxation shall be the date of payment." 4.7 From para-3 of the circular, it is evident that the circular is applicable only in respect of the invoices issued on or before 31st March, 2012. In the present case all the invoices are issued much after the 31st March, 2012 as the period of demand is 2016-17.
4.8 However, I find merits in the submissions of the appellant to the effect that for this circular they entertained a bonafide belief that service tax would be payable only when they received the payments, though that belief may be a disputed one or wrong but his belief is entertained.
Excise Appeal No.70421 of 2025 10 4.9 In the present case I observe that demand has been raised in respect of these services rendered during the period 2016-17 by show cause notice dated 21.10.2021, extended period of limitation could not have been invoked where appellant entertained a bonafide belief with regards to action undertaken by.
4.10 Hon'ble Supreme Court in the case of M/s UNIWORTH TEXTILES LTD. 2013 (288) ELT 161 has held as follows:-
"21. The Revenue contended that of the three categories, the conduct of the appellant falls under the case of "willful misstatement" and pointed to the use of the word "misutilizing" in the following statement found in the order of the Commissioner of Customs, Raipur in furtherance of its claim :
"The noticee procured 742.51 kl of furnace oil valued at Rs. 54,57,357/- without payment of customs duty by misutilizing the facility available to them under Notification No. 53/97-Cus., dated 3-6-1997"
22. We are not persuaded to agree that this observation by the Commissioner, unfounded on any material fact or evidence, points to a finding of collusion or suppression or misstatement. The use of the word "willful" introduces a mental element and hence, requires looking into the mind of the appellant by gauging its actions, which is an indication of one‟s state of mind. Black‟s Law Dictionary, Sixth Edition (pp 1599) defines "willful" in the following manner :-
"Willful. Proceeding from a conscious motion of the will; voluntary; knowingly; deliberate. Intending the result which actually comes to pass...
An act or omission is "willfully" done, if done voluntarily and intentionally and with the specific intent to do something the law forbids, or with the specific intent to fail to do something the law requires to be done..."
Excise Appeal No.70421 of 2025 11
23. In the present case, from the evidence adduced by the appellant, one will draw an inference of bona fide conduct in favour of the appellant. The appellant laboured under the very doubt which forms the basis of the issue before us and hence, decided to address it to the concerned authority, the Development Commissioner, thus, in a sense offering its activities to assessment. The Development Commissioner answered in favour of the appellant and in its reply, even quoted a letter by the Ministry of Commerce in favour of an exemption the appellant was seeking, which anybody would have found satisfactory. Only on receiving this satisfactory reply did the appellant decide to claim exemption. Even if one were to accept the argument that the Development Commissioner was perhaps not the most suitable repository of the answers to the queries that the appellant laboured under, it does not take away from the bona fide conduct of the appellant. It still reflects the fact that the appellant made efforts in pursuit of adherence to the law rather than its breach.
24. Further, we are not convinced with the finding of the Tribunal which placed the onus of providing evidence in support of bona fide conduct, by observing that "the appellants had not brought anything on record" to prove their claim of bona fide conduct, on the appellant. It is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. This Court observed in Union of India v. Ashok Kumar & Ors. - (2005) 8 SCC 760 that "it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility."
25. Moreover, this Court, through a catena of decisions, has held that the proviso to Section 28 of the Act finds Excise Appeal No.70421 of 2025 12 application only when specific and explicit averments challenging the fides of the conduct of the assessee are made in the show cause notice, a requirement that the show cause notice in the present case fails to meet. In Aban Loyd Chiles Offshore Limited and Ors. (supra), this Court made the following observations :
"21. This Court while interpreting Section 11-A of the Central Excise Act in Collector of Central Excise v. H.M.M. Ltd. (supra) has observed that in order to attract the proviso to Section 11-A(1) it must be shown that the excise duty escaped by reason of fraud, collusion or willful misstatement of suppression of fact with intent to evade the payment of duty. It has been observed :
„...Therefore, in order to attract the proviso to Section 11- A(1) it must be alleged in the show-cause notice that the duty of excise had not been levied or paid by reason of fraud, collusion or willful misstatement or suppression of fact on the part of the assessee or by reason of contravention of any of the provisions of the Act or of the Rules made thereunder with intent to evade payment of duties by such person or his agent. There is no such averment to be found in the show cause notice. There is no averment that the duty of excise had been intentionally evaded or that fraud or collusion had been practiced or that the assessee was guilty of wilful misstatement or suppression of fact. In the absence of any such averments in the show-cause notice it is difficult to understand how the Revenue could sustain the notice under the proviso to Section 11-A(1) of the Act.‟ It was held that the show cause notice must put the assessee to notice which of the various omissions or commissions stated in the proviso is committed to extend the period from six months to five years. That unless the assessee is put to notice the assessee would have no opportunity to meet the case of the Department. It was held :
Excise Appeal No.70421 of 2025 13 ...There is considerable force in this contention. If the department proposes to invoke the proviso to Section 11- A(1), the show-cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the Excise Department places reliance on the proviso it must be specifically stated in the show-cause notice which is the allegation against the assessee falling within the four corners of the said proviso...."
(Emphasis supplied)
26. Hence, on account of the fact that the burden of proof of proving mala fide conduct under the proviso to Section 28 of the Act lies with the Revenue; that in furtherance of the same, no specific averments find a mention in the show cause notice which is a mandatory requirement for commencement of action under the said proviso; and that nothing on record displays a willful default on the part of the appellant, we hold that the extended period of limitation under the said provision could not be invoked against the appellant."
4.11 In view of the above, I find that demand is hit by limitation and the findings recorded in the impugned order in this regard cannot stand in the eyes of law. Accordingly, the impugned order is set aside.
5.1 Appeal is allowed.
(Order pronounced in open court on- 14 October, 2025) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp